SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 22, 2000
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CONSOLIDATED PAPERS, INC.
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(Exact name of registrant as specified in charter)
Wisconsin 0-1051 39-0223100
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(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
231 First Avenue North, Wisconsin Rapids, WI 54495-8050
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (715) 422-3111
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N/A
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(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS
On February 22, 2000, Consolidated Papers, Inc., Stora Enso Oyj, and
Stora Enso Acquisition, Inc. entered into an Agreement and Plan of Merger, a
copy of which is attached as Exhibit 2.1 to this Form 8-K and incorporated
herein by reference.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
2.1 Agreement and Plan of Merger dated February 22, 2000, among
Consolidated Papers, Inc., Stora Enso Oyj, and Stora Enso Acquisition, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 2, 2000
CONSOLIDATED PAPERS, INC.
By: /s/ Carl H. Wartman
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Carl H. Wartman
Secretary and General Counsel
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AGREEMENT AND
PLAN OF MERGER
BY AND AMONG
CONSOLIDATED PAPERS, INC.
STORA ENSO OYJ,
AND
STORA ENSO ACQUISITION, INC.
FEBRUARY 22, 2000
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<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS..................................................1
1.1. Definitions..................................................1
ARTICLE 2 THE MERGER...................................................6
2.1. The Merger...................................................6
2.2. Organizational Documents.....................................7
2.3. Directors and Officers.......................................7
ARTICLE 3 CONVERSION OF SECURITIES AND RELATED MATTERS.................7
3.1. Capital Stock of MergerSub...................................7
3.2. Cancellation of Treasury Stock and Acquiror Owned Shares.....7
3.3. Conversion of Company Shares.................................8
3.4. Average Acquiror Share Price................................11
3.5. Exchange of Certificates....................................11
3.6. Company Stock Options.......................................13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............14
4.1. Corporate Existence and Power...............................15
4.2. Corporate Authorization.....................................15
4.3. Governmental Authorization..................................15
4.4. Non-Contravention...........................................15
4.5. Capitalization..............................................16
4.6. Subsidiaries................................................16
4.7. Company SEC Documents.......................................17
4.8. Financial Statements; No Material Undisclosed Liabilities...17
4.9. Information to Be Supplied..................................18
4.10. Absence of Certain Changes..................................18
4.11. Litigation..................................................19
4.12. Taxes.......................................................19
4.13. Employee Benefits...........................................19
4.14. Compliance with Laws; Licenses, Permits and Registrations...21
4.15. Title to Properties.........................................22
4.16. Intellectual Property.......................................22
4.17. Environmental Matters.......................................22
4.18. Finders' Fees; Opinions of Financial Advisor................23
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TABLE OF CONTENTS
4.19. Required Vote; Board Approval...............................23
4.20. State Takeover Statutes.....................................23
4.21. Tax Treatment...............................................23
4.22. Employee Relations..........................................23
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ACQUIROR..................24
5.1. Corporate Existence and Power...............................24
5.2. Corporate Authorization.....................................24
5.3. Governmental Authorization..................................24
5.4. Non-Contravention...........................................25
5.5. Capitalization of Acquiror and MergerSub....................25
5.6. Acquiror Public Documents...................................26
5.7. Financial Statements; No Material Undisclosed Liabilities...26
5.8. Information to Be Supplied..................................27
5.9. Absence of Certain Changes..................................27
5.10. Litigation..................................................27
5.11. Taxes.......................................................27
5.12. Compliance with Laws; Licenses, Permits and Registrations...28
5.13. Title to Properties.........................................28
5.14. Intellectual Property.......................................28
5.15. Environmental Matters.......................................29
5.16. Finders' Fees...............................................29
5.17. Required Vote; Board Recommendation.........................29
5.18. Availability of Funds.......................................29
5.19. Tax Treatment...............................................29
ARTICLE 6 COVENANTS OF THE COMPANY....................................30
6.1. Company Interim Operations..................................30
6.2. Shareholder Meeting.........................................32
6.3. Acquisition Proposals; Board Recommendation.................33
6.4. Affiliate Agreements........................................34
6.5. Termination of DRIP.........................................34
ARTICLE 7 COVENANTS OF ACQUIROR.......................................34
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TABLE OF CONTENTS
7.1. Acquiror Interim Operations.................................35
7.2. Shareholder Meeting; Board Recommendation...................35
7.3. Director and Officer Liability..............................36
7.4. Employee Benefits...........................................37
7.5. Stock Exchange Listing......................................38
7.6. Conduct of MergerSub........................................38
7.7. Transfer Taxes..............................................38
ARTICLE 8 COVENANTS OF ACQUIROR AND THE COMPANY.......................38
8.1. Reasonable Best Efforts.....................................38
8.2. Certain Filings; Cooperation in Receipt of Consents.........39
8.3. Public Announcements........................................40
8.4. Access to Information; Notification of Certain Matters......40
8.5. Further Assurances..........................................41
8.6. Tax Treatment...............................................41
8.7. Integration Committee.......................................41
8.8. Confidentiality.............................................42
ARTICLE 9 CONDITIONS TO MERGER........................................42
9.1. Conditions to the Obligations of Each Party.................42
9.2. Conditions to the Obligations of the Company................43
9.3. Conditions to the Obligations of Acquiror and MergerSub.....44
ARTICLE 10 TERMINATION.................................................45
10.1. Termination.................................................45
10.2. Effect of Termination.......................................46
10.3. Fees and Expenses...........................................46
ARTICLE 11 MISCELLANEOUS...............................................47
11.1. Notices.....................................................47
11.2. Survival of Representations, Warranties and
Covenants after the Effective Time..........................48
11.3. Amendments; No Waivers......................................49
11.4. Successors and Assigns......................................49
11.5. Governing Law...............................................49
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TABLE OF CONTENTS
11.6. Counterparts; Effectiveness; Third Party Beneficiaries......49
11.7. Jurisdiction................................................49
11.8. Waiver of Jury Trial........................................50
11.9. Enforcement.................................................50
11.10. Entire Agreement.............................................50
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is made and entered
into as of the 22nd day of February, 2000, by and among Consolidated Papers,
Inc., a Wisconsin corporation ("COMPANY"), Stora Enso Oyj, a Finnish corporation
("ACQUIROR"), and Stora Enso Acquisition, Inc., a Wisconsin corporation and a
wholly-owned Subsidiary of Acquiror ("MERGERSUB").
WHEREAS, the Boards of Directors of the Company and Acquiror each have
determined that a business combination between the Company and Acquiror is
advisable and in the best interests of their respective corporations and
shareholders and presents an opportunity for their respective corporations to
achieve long-term strategic and financial benefits;
WHEREAS, the parties intend that the merger qualify for U.S. federal
income tax purposes as a reorganization (a "368 REORGANIZATION") within the
meaning of Section 368(a) of the U.S. Internal Revenue Code of 1986, as amended
(together with the rules and regulations promulgated thereunder, the "CODE");
WHEREAS, by resolutions duly adopted, the respective Boards of
Directors of the Company, Acquiror and MergerSub have approved and adopted this
Agreement and the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and promises contained
herein, and intending to be legally bound, the parties hereto agree as set forth
below.
ARTICLE 1
DEFINITIONS
1.1. DEFINITIONS. (a) As used herein, the following terms have the
meanings set forth below.
"ACQUIROR BALANCE SHEET" means Acquiror's consolidated balance sheet
included in the Acquiror Annual Report relating to its fiscal year ended on
December 31, 1998.
"ACQUIROR PUBLIC DOCUMENTS" means (i) Acquiror's annual reports (the
"ACQUIROR ANNUAL REPORTS"), for its fiscal years ended December 31, 1997 and
December 31, 1998 as filed with the National Board of Patents and Registration
(the "FINNISH TRADE REGISTRY") (ii) Acquiror's quarterly reports (the "ACQUIROR
QUARTERLY REPORTS") for its fiscal quarters ended September 30, June 30 and
March 31, of fiscal years 1998 and 1999 as submitted to the Finnish Financial
Supervision, (iii) Acquiror's exchange offer/prospectus relating to the
combination of Enso Oyj and Stora Kopparbergs Bergslags Aktiebolag (publ) as
filed with the Finnish Financial Supervision, and (iv) all other reports,
filings, registration statements and other documents filed by it with the
Finnish Trade Registry or the Finnish Financial Supervision since December 31,
1997.
<PAGE>
"ACQUIROR SHARE" means one share of Series R stock of Acquiror, nominal
value 10 Finnish marks per share, and shall include American Depositary Receipts
evidencing any such share.
"ACQUISITION PROPOSAL" means any offer or proposal for, a merger,
consolidation, share exchange, business combination, reorganization,
recapitalization, liquidation, dissolution or other similar transaction
involving the Company or any of its Significant Subsidiaries, or for any
purchase or other acquisition of 15% or more of the assets or any class of
equity securities of the Company or any of its Significant Subsidiaries, other
than the transactions contemplated by this Agreement.
"AFFILIATE" means, with respect to any Person, any other Person,
directly or indirectly, controlling, controlled by, or under common control
with, such Person. For purposes of this definition, the term "CONTROL"
(including the correlative terms "CONTROLLING", "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise.
"BUSINESS DAY" means any day, other than a Saturday, Sunday or one on
which banks are authorized by law to close in New York, New York or Helsinki,
Finland.
"COMPANY BALANCE SHEET" means the Company's consolidated balance sheet
included in the Company 10-K relating to its fiscal year ended on December 31,
1998.
"COMPANY SHARE" means one share of common stock of the Company, $1.00
par value per share.
"COMPANY SEC DOCUMENTS" means (i) the annual reports on Form 10-K of
the Company (the "COMPANY 10-KS"), for the fiscal years ended December 31, 1997
and December 31, 1998, (ii) the quarterly reports on Form 10-Q of the Company
(the "COMPANY 10-QS") for the fiscal quarters ended September 30, June 30 and
March 31 of fiscal years 1998 and 1999, (iii) the Company's proxy statements
relating to meetings of, or actions taken without a meeting by, the Company
shareholders, held since December 31, 1998, and (iv) all other reports, filings,
registration statements and other documents filed by the Company with the SEC
since December 31, 1997.
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"FINNISH COMPANIES ACT" means the Companies Act of 1978, as amended, in
Finland.
"FINNISH FINANCIAL SUPERVISION" means the Financial Supervision
Authority of Finland.
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"FINNISH SECURITIES ACT" means the Securities Markets Act of 1989, as
amended, in Finland.
"GOVERNMENTAL ENTITY" means any federal, state or local governmental
authority, any transgovernmental authority or any court, administrative or
regulatory agency or commission or other governmental authority or agency,
domestic or foreign.
"HELSINKI STOCK EXCHANGE" means Helsinki Securities and Derivatives
Exchange, Clearing House Ltd.
"KNOWLEDGE" means, with respect to the matter in question, if any of
the executive officers of the Company or Acquiror, as the case may be, has, or
would reasonably be expected to have after conducting a reasonable
investigation, actual knowledge of the matter.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of an asset;
provided, however, that the term "LIEN" shall not include (i) liens for
utilities and current taxes not yet due and payable, (ii) mechanics', carriers',
workers', repairers', materialmen's, warehousemen's and other similar liens
arising or incurred in the ordinary course of business, or (iii) liens being
contested in good faith and relating to liabilities for which proper reserve has
been taken in accordance with applicable accounting principles.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
properties, assets, liabilities, financial condition, business or results of
operations of a Person and its Subsidiaries, taken as a whole, but shall exclude
any material adverse effect arising out of any change or development relating to
(i) U.S. or global economic or industry conditions, (ii) U.S. or global
financial markets or conditions or (iii) any generally applicable change in law,
rule or regulation or GAAP or interpretation of any thereof. "ACQUIROR MATERIAL
ADVERSE EFFECT" means a Material Adverse Effect in respect of Acquiror and
"COMPANY MATERIAL ADVERSE EFFECT" means a Material Adverse Effect in respect of
the Company.
"MERGERSUB SHARE" means one share of common stock of MergerSub, $0.01
par value per share.
"NYSE" means The New York Stock Exchange, Inc.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust or any other entity or organization, including
any Governmental Entity.
"PROXY STATEMENT/PROSPECTUS" means the proxy statement/prospectus
included in the Registration Statement relating to the Company Shareholder
Meeting and the Acquiror Shareholder Meeting, together with any amendments or
supplements thereto.
<PAGE>
"REGISTRATION STATEMENT" means the Registration Statement on Form F-4
or comparable form registering the Acquiror Shares issuable in connection with
the Merger under the Securities Act.
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"SIGNIFICANT SUBSIDIARY" has the meaning specified in Rule 1-02 of
Regulation S-X of the SEC.
"SUBSIDIARY" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions are directly or indirectly owned by such Person.
"ACQUIROR SUBSIDIARY" means a Subsidiary of Acquiror and "COMPANY SUBSIDIARY"
means a Subsidiary of the Company.
"SUPERIOR PROPOSAL" means a bona fide, written Acquisition Proposal for
at least a majority of the outstanding Company Shares that is on terms which a
majority of the Company's Board of Directors determines in good faith, after
consultation with an investment banker of nationally recognized reputation and
outside legal counsel, (i) would result in a transaction, if consummated, that
would be more favorable to the Company's shareholders (in their capacities as
shareholders), (taking into account all legal, financial, regulatory and other
aspects of the proposal and the identity of the offeror) than the transactions
contemplated hereby (after giving effect to any revised proposal made by or on
behalf of Acquiror prior to the end of the five Business-Day-period referred to
in Section 6.3(d)) and (ii) is reasonably capable of being consummated.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Terms Section
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Acquiror Preamble
Acquiror Acquisition Proposal 10.3(e)
Acquiror Business 5.14
Acquiror Intellectual Property 5.14
Acquiror Recommendation 7.2
Acquiror Returns 5.11
Acquiror Securities 5.5(b)
Acquiror Series A Shares 5.5(a)
Acquiror Series R Shares 5.5(a)
Acquiror Shareholder Approval 5.17(a)
Acquiror Shareholder Meeting 7.2
Acquiror Termination Fee 10.3(e)
<PAGE>
Acquiror Welfare Plan 7.4(a)
Advance Notice 7.4(b)
Agreement Preamble
Articles of Merger 2.1(b)
Assumed Option 3.6(a)
Average Acquiror Share Price 3.4
Cash Consideration 3.3(a)
Cash Election 3.3(b)
Cash Election Number 3.3(c)
Cash Election Shares 3.3(d)
Cash Fraction 3.3(d)
Certificates 3.3(h)
Closing 2.1(d)
Closing Date 2.1(d)
Code Recitals
Company Preamble
Company Affiliate 6.4
Company Business 4.16
Company Employee Plans 4.13(a)
Company Intellectual Property 4.16
Company Option 3.6(a)
Company Option Plan 3.6(a)
Company Recommendation 6.2
Company Returns 4.12
Company Securities 4.5(b)
Company Shareholder Approval 4.19(a)
Company Shareholder Meeting 6.2
Department 2.1(b)
Effective Time 2.1(b)
Election Deadline 3.3(i)
Election Form Record Date 3.3(h)
End Date 10.1(b)(i)
Environmental Laws 4.17(b)
ERISA 4.13(a)
ERISA Affiliate 4.13(a)
Exchange Agent 3.5(a)
Exchange Fund 3.5(a)
Form of Election 3.3(h)
FPA 4.3
GAAP 4.8(a)
HSR Act 4.3
IAS 5.7(a)
Indemnified Parties 7.3(b)
Intellectual Property 4.16
Merger 2.1(a)
<PAGE>
Merger Consideration 3.3(a)
MergerSub Preamble
Multiemployer Plan 4.13(b)
Non-Election 3.3(b)
Non-Election Shares 3.3(d)
Non-Election Fraction 3.3(f)
PUHCA 4.3
Random Trading Days 3.4(a)
Retirement Plan 4.13(b)
Stock Consideration 3.3(a)
Stock Election 3.3(b)
Stock Election Number 3.3(c)
Stock Election Shares 3.3(d)
Stock Fraction 3.3(e)
Surviving Corporation 2.1(a)
Termination Fee 10.3(b)
Third Party Acquisition Event 10.3(c)
368 Reorganization Recitals
Transfer Taxes 7.7
Wisconsin BCL 2.1(a)
WPUHCA 4.3
ARTICLE 2
THE MERGER
2.1. THE MERGER.
(a) At the Effective Time, the Company shall be merged with and into
MergerSub (the "MERGER") in accordance with the terms and conditions of this
Agreement and the Wisconsin business corporation law (the "WISCONSIN BCL"), at
which time the separate corporate existence of the Company shall cease and
MergerSub shall continue its existence. In its capacity as the corporation
surviving the Merger, this Agreement sometimes refers to MergerSub as the
"SURVIVING CORPORATION".
(b) As soon as practicable after satisfaction or waiver of all
conditions to the Merger set forth herein, the Company and MergerSub will file
articles of merger or other appropriate documents (the "ARTICLES OF MERGER")
with the Wisconsin Department of Financial Institutions (the "DEPARTMENT") and
make all other filings or recordings required by the Wisconsin BCL in connection
with the Merger. The Merger shall become effective at the time when the Articles
of Merger are duly filed with and accepted by the Department, or at such later
time as is agreed upon by the parties and specified in the Articles of Merger
(such time as the Merger becomes effective is referred to herein as the
"EFFECTIVE TIME").
(c) From and after the Effective Time, the Merger shall have the
effects set forth in Section 180.1106 of the Wisconsin BCL.
(d) The closing of the Merger (the "CLOSING") shall be held at the
offices of McDermott, Will & Emery, 227 West Monroe Street, Chicago, IL 60606
(or such other place as agreed by the parties) on a date to be specified by the
parties, which shall be no later than the third Business Day after satisfaction
or, to the extent permitted hereby, waiver of the conditions set forth in
Article 9, unless the parties hereto agree to another date. The date upon which
the Closing occurs is hereinafter referred to as the "CLOSING DATE".
2.2. ORGANIZATIONAL DOCUMENTS. The Articles of Merger shall provide
that at the Effective Time (i) MergerSub's articles of incorporation in effect
immediately prior to the Effective Time shall be the Surviving Corporation's
articles of incorporation; provided that Article I of the articles of
incorporation shall be amended as of the Effective Time to read as follows: "The
name of the corporation is Stora Enso Consolidated Papers, Inc." and (ii)
MergerSub's bylaws in effect immediately prior to the Effective Time shall be
the Surviving Corporation's bylaws, in each case until amended in accordance
with applicable law.
2.3. DIRECTORS AND OFFICERS.
(a) Acquiror agrees to take all necessary actions so that the agenda
for the Acquiror Shareholder Meeting shall include a proposal for, and to use
its reasonable best efforts to obtain the approval of, the election of George W.
Mead (or, if unavailable, another member of the Company's current Board of
Directors reasonably acceptable to Acquiror) to serve, from and after the
Effective Time, on Acquiror's Board of Directors for a period of at least two
(2) years following the Effective Time.
(b) From and after the Effective Time (until successors are duly
elected or appointed and qualified), (i) MergerSub's directors at the Effective
Time shall be the Surviving Corporation's directors and (ii) the Company's
officers immediately prior to the Effective Time shall be the Surviving
Corporation's officers.
ARTICLE 3
CONVERSION OF SECURITIES AND RELATED MATTERS
3.1. CAPITAL STOCK OF MERGERSUB. As of the Effective Time, each
MergerSub Share
outstanding immediately prior to the Effective Time shall remain outstanding and
continue to represent one fully paid and nonassessable (except as provided in
Section 180.0622(2)(b) of the Wisconsin BCL) common share of the Surviving
Corporation.
3.2. CANCELLATION OF TREASURY STOCK AND ACQUIROR OWNED SHARES. As of
the Effective Time, by virtue of the Merger and without any action on the part
of the holder of any Company Shares or MergerSub Shares, each Company Share held
by the Company as treasury stock or owned by Acquiror, any Acquiror Subsidiary
or any Company Subsidiary immediately
<PAGE>
prior to the Effective Time shall be canceled and retired, and no payment shall
be made or consideration delivered in respect thereof.
3.3. CONVERSION OF COMPANY SHARES.
(a) As of the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any Company Shares or MergerSub Shares,
except as otherwise provided in this Section 3.3, each Company Share issued and
outstanding immediately prior to the Effective Time (other than shares to be
cancelled in accordance with Section 3.2) shall be converted into, at the
election of the holder thereof, one of the following or a combination of
Acquiror Shares and cash determined in accordance with this Section 3.3 (the
"MERGER Consideration"):
(i) the right to receive a number of Acquiror Shares determined by
dividing $44.00 by the Average Acquiror Share Price and rounding the result
to the nearest one thousandth of a share (the "STOCK Consideration");
provided that, (x) if the Average Acquiror Share Price is less than $12.15,
the Stock Consideration shall be 3.621 Acquiror Shares and (y) if the
Average Acquiror Share Price is greater than $16.43, the Stock
Consideration shall be 2.678 Acquiror Shares; or
(ii) the right to receive in cash from Acquiror, without interest, an
amount equal to $44.00 (the "CASH CONSIDERATION");
provided, however, that if (A) the Registration Statement covering the Acquiror
Shares has not been declared effective by September 30, 2000 or (B) the Acquiror
Shares have not been approved for listing, subject only to official notice of
issuance, by the NYSE (or, failing that, by NASDAQ) by October 31, 2000, the
Merger Consideration shall consist of all Cash Consideration, and as of the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any Company Shares or MergerSub Shares, each Company Share issued
and outstanding immediately prior to the Effective Time (other than shares to be
cancelled in accordance with Section 3.2) shall be converted into the right to
receive the Cash Consideration. In such event, the provisions of Sections 3.3(b)
- - (k), 3.4, 7.5, 8.6, 9.1(a)(ii), 9.1(b), 9.2(b) and 9.3(b) shall be of no
further force or effect.
(b) Elections. Subject to the election and allocation procedures set
forth in this Section 3.3, each holder of Company Shares will be entitled, with
respect to the Merger Consideration to be received for each Company Share held
by the holder, to (i) elect to receive the Stock Consideration (a "STOCK
ELECTION"), or (ii) elect to receive the Cash Consideration (a "CASH ELECTION"),
or (iii) indicate that the holder has no preference as to the receipt of Stock
Consideration or Cash Consideration (a "NON-ELECTION").
(c) Election Numbers. The number of Company Shares to be converted into
the right to receive the Cash Consideration in the Merger shall be equal to 50%
of the number of Company Shares outstanding immediately prior to the Effective
Time (the "CASH ELECTION NUMBER"). The number of Company Shares to be converted
into the right to receive the Stock Consideration in the Merger (the "STOCK
ELECTION NUMBER") shall be equal to 50% of the number of Company Shares
outstanding immediately prior to the Effective Time.
<PAGE>
(d) Cash Election Adjustments. If the aggregate number of Company
Shares covered by Cash Elections (the "CASH ELECTION SHARES") exceeds the Cash
Election Number, all Company Shares covered by Stock Elections (the "STOCK
ELECTION SHARES") and all Company Shares covered by Non-Elections (the
"NON-ELECTION SHARES") shall be converted into the right to receive the Stock
Consideration, and the Cash Election Shares shall be converted into the right to
receive Acquiror Shares and cash in the following manner: each Cash Election
Share shall be converted into the right to receive (i) an amount in cash,
without interest, equal to the product of (x) the Cash Consideration and (y) a
fraction (the "CASH FRACTION"), the numerator of which shall be the Cash
Election Number and the denominator of which shall be the total number of Cash
Election Shares, and (ii) a number of Acquiror Shares equal to the product of
(x) the Stock Consideration and (y) one minus the Cash Fraction.
(e) Stock Election Adjustments. If the aggregate number of Stock
Election Shares exceeds the Stock Election Number, all Cash Election Shares and
all Non-Election Shares shall be converted into the right to receive the Cash
Consideration, and the Stock Election Shares shall be converted into the right
to receive Acquiror Shares and cash in the following manner: each Stock Election
Share shall be converted into the right to receive (i) a number of Acquiror
Shares equal to the product of (x) the Stock Consideration and (y) a fraction
(the "STOCK FRACTION"), the numerator of which shall be the Stock Election
Number and the denominator of which shall be the total number of Stock Election
Shares, and (ii) an amount in cash, without interest, equal to the product of
(x) the Cash Consideration and (y) one minus the Stock Fraction.
(f) Non-Election Adjustments. In the event that neither Section 3.3(d)
nor 3.3(e) above is applicable, all Cash Election Shares shall be converted into
the right to receive the Cash Consideration, all Stock Election Shares shall be
converted into the right to receive the Stock Consideration, and the
Non-Election Shares, if any, shall be converted into the right to receive
Acquiror Shares and cash in the following manner: each Non-Election Share shall
be converted into the right to receive (i) an amount in cash, without interest,
equal to the product of (x) the Cash Consideration and (y) a fraction (the
"NON-ELECTION FRACTION"), the numerator of which shall be the excess of (A) the
Cash Election Number over (B) the total number of Cash Election Shares and the
denominator of which shall be the excess of (C) the number of Company Shares
outstanding immediately prior to the Effective Time over (D) the sum of the
total number of Cash Election Shares and Stock Election Shares and (ii) a number
of Acquiror Shares equal to the product of (x) the Stock Consideration and (y)
one minus the Non-Election Fraction.
(g) Adjustments Relating to Tax Opinions. If either the tax opinion
referred to in Section 9.2(b) or the tax opinion referred to in Section 9.3(b)
cannot be rendered (as reasonably determined, in each case, by the counsel
charged with giving the opinion) as a result of the Merger potentially failing
to satisfy continuity of interest requirements under applicable federal income
tax principles relating to reorganizations under Section 368(a) of the Code,
then Acquiror shall reduce to the minimum extent necessary to enable the
relevant tax opinion to be rendered, the Cash Election Number and
correspondingly increase the Stock Election Number.
(h) Exercise of Election. All Cash Elections, Stock Elections and
Non-Elections shall be made on a form designed for that purpose and mutually
acceptable to the Company and Acquiror (a "FORM OF ELECTION") and mailed to
holders of record of Company Shares as of the record date
<PAGE>
for the Company Shareholders' Meeting or such other date as Acquiror and the
Company shall mutually agree (the "ELECTION FORM RECORD DATE"). Acquiror and the
Company shall make available one or more Election Forms as may be reasonably
requested by all persons who become holders (or beneficial owners) of Company
Shares between the Election Form Record Date and the close of business on the
Effective Time. Elections shall be made by submitting to the Exchange Agent a
duly completed Form of Election. To be effective, a Form of Election must be
properly completed, signed and submitted to the Exchange Agent in accordance
with Section 3.3(i) and, in the case of Company Shares that are not held in book
entry form, accompanied by the certificates representing the Company Shares (the
"CERTIFICATES") as to which the election is being made (or an appropriate
guarantee of delivery by an appropriate commercial bank or trust company in the
United States or a member of a registered national securities exchange or the
National Association of Securities Dealers, Inc.); provided that such
Certificates are in fact delivered to the Exchange Agent within three trading
days after the date of execution of such guarantee of delivery. For Company
Shares that are held in book entry form, Acquiror shall establish procedures for
the delivery of such Company Shares, which procedures shall be reasonably
acceptable to the Company. Acquiror will have the discretion, which it may
delegate in whole or in part to the Exchange Agent, to reasonably determine
whether Forms of Election have been properly completed, signed and submitted or
revoked and to disregard immaterial defects in Forms of Election. The decision
of Acquiror (or the Exchange Agent) shall be conclusive and binding. Neither
Acquiror nor the Exchange Agent will be under any obligation to notify any
person of any defect in a Form of Election submitted to the Exchange Agent. The
Exchange Agent shall also make all computations contemplated by this Section 3.3
and all computations shall be conclusive and binding on the holders of Company
Shares.
(i) Election Deadline. A Form of Election must be received by the
Exchange Agent by the close of business on the fifth Business Day following the
Closing Date (which date shall be publicly announced by Acquiror as soon as
practicable, but in no event less than three trading days prior to the Closing
Date, and which shall, in any event, be no fewer than 20 Business Days from the
mailing of the Form of Election) (such time hereinafter referred to as the
"ELECTION DEADLINE") in order to be effective. Any holder of Company Shares who
has made an election may at any time prior to the Election Deadline change its
election by submitting a properly completed revised Form of Election, to the
Exchange Agent prior to the Election Deadline. Any holder of Company Shares may
at any time prior to the Election Deadline revoke the election and withdraw the
Certificates deposited with the Exchange Agent by written notice to the Exchange
Agent received prior to the Election Deadline. As soon as practicable after the
Election Deadline, the Exchange Agent shall determine the allocation of the cash
portion of the Merger Consideration and the stock portion of the Merger
Consideration and shall notify Acquiror of its determination. Promptly after
notification, Acquiror shall issue a press release announcing in reasonable
detail the results of the Exchange Agent's allocation of the Merger
Consideration.
(j) Deemed Non-Election. A holder of Company Shares who does not submit
a Form of Election which is received by the Exchange Agent prior to the Election
Deadline shall be deemed to have made a Non-Election. If Acquiror or the
Exchange Agent shall determine that any purported Cash Election or Stock
Election was not properly made, the purported Cash
<PAGE>
Election or Stock Election shall be deemed to be of no force and effect and the
holder making such purported Cash Election or Stock Election shall be deemed to
have made a Non-Election.
(k) Fractional Shares. No fractional shares shall be issued in the
Merger. All fractional shares that a holder of any Company Shares would
otherwise be entitled to receive as a result of the Merger shall be aggregated.
If a fractional Acquiror Share results from the aggregation, the holder shall be
entitled to receive, in lieu thereof, a cash amount, without interest,
determined by multiplying the Average Acquiror Share Price by the fraction of an
Acquiror Share to which the holder would otherwise have been entitled. As
promptly as practicable after the determination of the amount of cash, if any,
to be paid to holders of fractional share interests, the Exchange Agent shall so
notify Acquiror, and Acquiror shall deposit that amount with the Exchange Agent
and shall cause the Exchange Agent to forward payments to the holders of
fractional share interests, subject to and in accordance with the terms of this
Section 3.3.
3.4. AVERAGE ACQUIROR SHARE PRICE. (a) "AVERAGE ACQUIROR SHARE PRICE"
means the average for the Random Trading Days of the closing price per Acquiror
Share in Euros on the Helsinki Stock Exchange as so reported in the Financial
Times, U.S. Edition, or, if not reported therein, another authoritative source
(converting each of such daily closing prices per share to U.S. Dollars based
upon the "closing mid-point" exchange rate published in respect of each such
Random Trading Day in the "Currencies and Money" segment in the "Companies &
Markets" section of the Financial Times, U.S. Edition). "RANDOM TRADING DAYS"
means the ten trading days selected by lot out of the twenty trading days ending
on and including the fifth trading day preceding the Effective Time. The Random
Trading Days shall be selected by lot by Acquiror and the Company at 5:00 p.m.
New York time on the fourth trading day preceding the Closing Date.
(b) If at any time during the period between the date of this Agreement
and the Effective Time, any change in the outstanding shares of capital stock of
Acquiror or securities convertible or exchangeable into capital stock of
Acquiror shall occur, including by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, or any dividend or distribution thereon (other than regular cash
dividends) or a record date with respect to any of the foregoing shall occur
during such period, the number of Acquiror Shares constituting part of the
Merger Consideration shall be appropriately adjusted to provide to the holders
of the Acquiror Shares and the Company Shares the same economic effect as
contemplated by this Agreement prior to the consummation of such event.
3.5. EXCHANGE OF CERTIFICATES. (a) Exchange Agent. Promptly after the
date hereof, Acquiror shall appoint Harris Trust and Savings Bank or a bank or
trust company reasonably acceptable to the Company as an agent (the "EXCHANGE
AGENT") for the benefit of holders of Company Shares for the purpose of
exchanging, pursuant to this Article 3, Certificates. Acquiror will make
available to the Exchange Agent, as needed, the Merger Consideration, together
with any dividends or distributions with respect thereto, if any, to be paid in
respect of Company Shares pursuant to this Article 3 (the "EXCHANGE FUND"), and
except as contemplated by Section 3.5(f) or Section 3.5(g) hereof, the Exchange
Fund shall not be used for any other purpose.
<PAGE>
(b) Exchange Procedures. As promptly as practicable after the Effective Time,
Acquiror shall send, or shall cause the Exchange Agent to send, to each record
holder of Certificates, who has not previously submitted a valid Form of
Election, a letter of transmittal and instructions (which shall be in customary
form and specify that delivery shall be effected, and risk of loss and title
shall pass, only upon delivery of the Certificates to the Exchange Agent), for
use in the exchange contemplated by this Section 3.5. Upon surrender of a
Certificate to the Exchange Agent, together with a duly executed letter of
transmittal, the holder shall be entitled to receive in exchange therefor the
Merger Consideration and any unpaid dividends and distributions thereon as
provided in this Article 3 in respect of the Company Shares represented by the
Certificate (after giving effect to any required withholding tax). Until
surrendered as contemplated by this Section 3.5, each Certificate shall be
deemed after the Effective Time to represent only the right to receive the
Merger Consideration and any unpaid dividends and distributions thereon as
provided in this Article 3. If any portion of the Merger Consideration is to be
paid to a Person other than the registered holder of the Certificate, it shall
be a condition to payment that the Certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting payment shall pay to the Exchange Agent any transfer or other taxes
required as a result of payment to a Person other than the registered holder of
the Certificate or establish to the satisfaction of the Exchange Agent that the
tax has been paid or is not payable.
(c) Distributions with Respect to Unexchanged Shares. Whenever a
dividend or other distribution is declared by Acquiror in respect of the
Acquiror Shares, the record date for which is at or after the Effective Time,
that declaration shall include dividends or other distributions in respect of
all Acquiror Shares issuable pursuant to this Agreement. No dividends or other
distributions declared or made after the Effective Time with respect to Acquiror
Shares constituting part of the Merger Consideration shall be paid to the holder
of any unsurrendered Certificate, and no cash payment in lieu of fractional
shares shall be paid to any holder, until the Certificate is surrendered as
provided in Section 3.3(h) or this Section 3.5. Following surrender, there shall
be paid, without interest, to the Person in whose name the Acquiror Shares have
been registered (i) at the time of surrender, the amount of dividends or other
distributions with a record date after the Effective Time previously paid or
payable on the date of surrender with respect to whole Acquiror Shares, less the
amount of any withholding taxes that may be required thereon, and (ii) at the
appropriate payment date subsequent to surrender, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
whole Acquiror Shares, less the amount of any withholding taxes which may be
required thereon.
(d) No Further Rights in Company Shares. All Acquiror Shares issued or
cash paid upon surrender of Certificates in accordance with the terms hereof
shall be deemed to have been issued in full satisfaction of all rights
pertaining to Company Shares represented thereby. From and after the Effective
Time, the holders of Certificates shall cease to have any rights with respect to
Company Shares, except as otherwise provided herein or by law. As of the
Effective Time, the stock transfer books of the Company shall be closed and
there shall be no further registration of transfers on the Company's stock
transfer books of any Company Shares. If, after the Effective Time, Certificates
are presented to the Surviving Corporation for any reason, they shall be
canceled and exchanged as provided in this Section 3.5.
(e) Return of Merger Consideration. Upon demand by Acquiror, the
Exchange Agent shall deliver to Acquiror any portion of the Merger Consideration
made available to the Exchange Agent pursuant to this Section 3.5 that remains
undistributed to holders of Company Shares one year after the Effective Time.
Holders of Certificates who have not complied with this Section 3.5 prior to the
demand by the Acquiror shall thereafter look only to Acquiror for payment of any
claim to the Merger Consideration and dividends or distributions, if any, in
respect thereof.
(f) No Liability. None of Acquiror, the Surviving Corporation or the
Exchange Agent shall be liable to any Person in respect of any Company Shares
(or dividends or distributions with respect thereto) for any amounts paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered immediately
prior to such earlier date on which any payment pursuant to this Article III
would otherwise escheat to or become property of any Governmental Entity, the
payment in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interests of any Person previously entitled thereto.
(g) Withholding Rights. Each of the Surviving Corporation and Acquiror
shall be entitled to deduct and withhold from the Merger Consideration (and any
dividends or distributions thereon) otherwise payable hereunder to any Person
any amounts which it is required to deduct and withhold with respect to payment
under any provision of federal, state, local or foreign income tax law. To the
extent that the Surviving Corporation or Acquiror withholds those amounts, the
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of Company Shares in respect of which deduction and
withholding was made by the Surviving corporation or Acquiror, as the case may
be.
(h) Lost Certificates. If any Certificate has been or has claimed to
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming that Certificate has been lost, stolen or destroyed
and, if required by Acquiror, the posting by such Person of a bond, in such
reasonable amount as Acquiror may direct, as indemnity against any claim that
may be made against it with respect to that Certificate, the Exchange Agent will
deliver in exchange for such lost, stolen or destroyed Certificate, the proper
amount of the Merger Consideration, together with any unpaid dividends and
distributions on any Acquiror Shares, as contemplated by this Article 3.
3.6. COMPANY STOCK OPTIONS. (a) At the Effective Time, each option to
purchase Company Shares (each, a "COMPANY OPTION") outstanding under any stock
option or compensation plan or other plan, agreement or arrangement of the
Company (each, a "COMPANY OPTION PLAN"), whether or not vested or exercisable,
shall be assumed by Acquiror (each such option an "ASSUMED OPTION") and
thereafter be deemed to constitute an option to purchase, on the same terms and
conditions (including such terms relating to the acceleration of vesting and
exercisability of such option, the term of such option and the adjustment of
such option in the event of certain corporate transactions) as were applicable
to such Assumed Option as of the Effective Time, the greatest number of Acquiror
Shares that equals the product of (A) the number of Company Shares that were
subject to such Assumed Option immediately prior to the Effective Time
multiplied by the (B) Stock Consideration, at an exercise price per Acquiror
Share equal to the quotient of (x) the exercise price per Company Share subject
to such Assumed Option immediately prior to the Effective Time divided by (y)
the Stock Consideration. The adjustments provided herein with respect to any
Assumed Option that is an "incentive stock option" (as defined in Section 422 of
the Code) shall be effected in a manner consistent with Section 424(a) of the
Code.
(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of any Company Option Plan or
related agreement) that are necessary or appropriate to give effect to the
transactions contemplated by Section 3.6(a), including, without limitation to
(A) effectuate the assumption and conversion of the Assumed Options by the
Acquiror and the assignment to Acquiror of the authorities and responsibilities
of the Board of Directors of the Company or any committee thereof under the
relevant Company Option Plan, (B) preclude the grant of any additional Company
Option under any of the Company Option Plans and (C) make such other amendments
as Acquiror shall determine are necessary to comply with any securities or other
laws that will become applicable to such Company Option Plan or Assumed Option
at or after the Effective Time or otherwise by reason of the Merger or by reason
of this Section 3.6. Prior to the Effective Time, each of the Company and the
Acquiror shall take appropriate action to approve the deemed grant of options
and/or cancellation of options, as applicable, for purposes of Section 16(b) of
the Exchange Act.
(c) By way of example and without limiting the foregoing: assuming an
Average Acquiror Share Price of $12.00, a Company Option to purchase 10,000
Company Shares at an exercise price of $26.3125 per share would become an
Assumed Option to purchase 36,210 Acquiror Shares at an exercise price of
$7.2666 per share; assuming an Average Acquiror Share Price of $14.29, that
Company Option would become an Assumed Option to purchase 30,790 Acquiror Shares
at an exercise price of $8.5458 per share; and assuming an Average Acquiror
Share Price of $16.50, that Company Option would become an Assumed Option to
purchase 26,780 Acquiror Shares at an exercise price of $9.8254.
(d) Notwithstanding the foregoing, if the Merger Consideration consists
of all Cash Consideration pursuant to the proviso in Section 3.3(a), then each
Company Option, whether or not vested or exercisable, shall be converted into
the right to receive cash in an amount equal to the difference between the value
of the Cash Consideration and the aggregate exercise price for the Company
Shares otherwise purchasable pursuant to the Company Option (rounded down to the
nearest whole cent). Such amount shall be payable by the Acquiror at the
Effective Time.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in (i) the Company Disclosure Schedule attached
hereto (which disclosure schedule shall make a specific reference to the
particular Section or Subsection of this Agreement to which exception is being
taken) or (ii) the Company SEC Documents filed
<PAGE>
or made prior to the date hereof, the Company represents and warrants to
Acquiror as set forth below.
4.1. CORPORATE EXISTENCE AND POWER. The Company is a corporation
validly existing and in good standing under the laws of the State of Wisconsin,
and has all corporate powers required to carry on its business as now conducted.
The Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes qualification necessary,
except where the failure to be qualified would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect. The
articles of incorporation and bylaws of the Company have not been amended since
the filing of the Company 10-K relating to its fiscal year ended December 31,
1998.
4.2. CORPORATE AUTHORIZATION. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby are within the Company's corporate powers and,
except for the Company Shareholder Approval (as defined herein), have been duly
authorized by all necessary corporate action. Assuming that this Agreement
constitutes the valid and binding obligation of Acquiror and MergerSub, this
Agreement constitutes a valid and binding agreement of the Company, enforceable
in accordance with its terms.
4.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any Governmental Entity, other than (a) the filing of (i)
articles of merger in accordance with the Wisconsin BCL and (ii) appropriate
documents with the relevant authorities of other states or jurisdictions in
which the Company is qualified to do business; (b) compliance with any
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976 (the "HSR ACT") and any comparable foreign filings or approvals (including
any filing required under the Canadian Competition Act and compliance with, and
the filing (if necessary) of a notification with the European Commission under,
Council Regulation (EEC) No. 4064/89); (c) compliance with any requirements, and
receipt of applicable approvals or exemptions, under the Public Utility Holding
Company Act of 1935, as amended ("PUHCA"), the Federal Power Act ("FPA"), and
the Wisconsin Public Utility Holding Company Act "WPUHCA"); (d) compliance with
any applicable requirements of the Securities Act and the Exchange Act; (e) such
as may be required under any applicable state securities or blue sky laws; and
(f) other consents, approvals, actions, orders, authorizations, registrations,
declarations and filings which, if not obtained or made, would not, individually
or in the aggregate, (x) be reasonably likely to have a Company Material Adverse
Effect or (assuming for this purpose the Effective Time has occurred) an
Acquiror Material Adverse Effect, or (y) materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement.
4.4. NON-CONTRAVENTION. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (a) contravene or conflict
with the Company's articles of incorporation or
<PAGE>
bylaws, (b) assuming compliance with the matters referred to in Section 4.3,
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company, (c) result in any violation or breach of, or
constitute (with or without notice or lapse of time or both) a default under (or
give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit under) any agreement, contract or
other instrument or obligation binding upon the Company or any Company
Subsidiary or any property, asset, license, franchise, permit or other
authorization held by the Company or any Company Subsidiary, or (d) result in
the creation or imposition of any Lien on any asset of the Company or any
Company Subsidiary other than, in the case of each of (b), (c) and (d), any
items that would not, individually or in the aggregate (x) be reasonably likely
to have a Company Material Adverse Effect or (y) materially impair the ability
of the Company to consummate the transactions contemplated by this Agreement.
4.5. CAPITALIZATION. (a) The authorized capital stock of the Company
consists of 200,000,000 Company Shares and 15,000,000 shares of preferred stock,
par value $.01 per share. As of January 31, 2000, 91,140,982 Company Shares were
issued (304,025 Shares of which were held in treasury) and stock options to
purchase an aggregate of 2,525,627 Company Shares (of which options to purchase
an aggregate of 1,489,948 Company Shares were exercisable) were outstanding with
additional options on approximately 600,000 Company Shares granted as set forth
on Schedule 4.5. No shares of preferred stock have been issued. All outstanding
Company Shares have been duly authorized and validly issued and are fully paid
and nonassessable, except as provided under Section 180.0622(2)(b) of the
Wisconsin BCL.
(b) As of the date hereof, except (i) as set forth in this Section 4.5
and (ii) for changes since January 31, 2000 resulting from the exercise of stock
options outstanding on the date hereof or as described on Schedule 4.5, there
are no outstanding (x) shares of capital stock or other voting securities of the
Company, (y) securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company, and (z) options,
warrants, securities, calls, commitments, agreements or other rights of any
character obligating the Company or any Company Subsidiary to issue, deliver or
sell or cause to be issued, delivered or sold any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company or obligating the Company or any Company
Subsidiary to grant, extend, accelerate the vesting of or enter into any such
option, warrant, security, call, commitment, agreement or other right (the items
in clauses (x), (y) and (z) being referred to collectively as the "COMPANY
SECURITIES"). There are no outstanding obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise acquire any Company Securities.
4.6. SUBSIDIARIES. (a) Each Subsidiary of the Company is a corporation
duly incorporated or an entity duly organized, and is validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, has all powers and authority and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, in each case with exceptions
<PAGE>
which would not, individually or in the aggregate, be reasonably likely to have
a Company Material Adverse Effect. The Company Disclosure Schedule sets forth a
list of all Subsidiaries of the Company and their respective jurisdictions of
incorporation or organization and identifies the Company's (direct or indirect)
percentage equity ownership interest therein.
(b) All of the outstanding shares of capital stock of, or other
ownership interest in, each Company Subsidiary have been validly issued and are
fully paid and nonassessable (except as provided under Section 180.0622(2)(b) of
the Wisconsin BCL for subsidiaries incorporated in Wisconsin). All of the
outstanding capital stock of, or other ownership interests in, each Company
Subsidiary is owned, directly or indirectly, by the Company free and clear of
any Lien and free of any other limitation or restriction (including any
limitation or restriction on the right to vote, sell or otherwise dispose of the
stock or other ownership interests) with exceptions which would not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect. There are no outstanding (i) securities of the Company
or any of its Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities or ownership interests in any
of its Subsidiaries, (ii) options, warrants, securities, calls, commitments,
agreements or other rights of any character obligating the Company or any of its
Subsidiaries to issue, deliver or sell or cause to be issued, delivered or sold
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable or exercisable for any capital
stock, voting securities or ownership interests in, any of its Subsidiaries or
obligating the Company or any Company Subsidiary to grant, extend, accelerate
the vesting of or enter into any such option, warrant, security, call,
commitment, agreement or other right or (iii) obligations of the Company or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding
securities of any of its Subsidiaries or any capital stock of, or other
ownership interests in, any of its Subsidiaries. Except as set forth on Schedule
4.6, the Company does not own, directly or indirectly, any equity securities of
any Person, other than a Company Subsidiary.
4.7. COMPANY SEC DOCUMENTS. (a) The Company has made available to
Acquiror the Company SEC Documents. The Company has filed all reports, filings,
registration statements and other documents required to be filed by it with the
SEC since December 31, 1997. No Company Subsidiary is required to file any form,
report, registration statement or prospectus or other document with the SEC.
(b) As of its filing date, each Company SEC Document was filed on a
timely basis and complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and/or PUHCA, as
the case may be.
(c) No Company SEC Document filed since December 31, 1997 contained, as
of its filing date or effective date, as applicable, any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading.
4.8. FINANCIAL STATEMENTS; NO MATERIAL UNDISCLOSED LIABILITIES. (a) The
audited consolidated financial statements and unaudited consolidated interim
financial statements
<PAGE>
of the Company included in the Company 10-Ks and the Company 10-Qs fairly
present in all material respects, in conformity with U.S. generally accepted
accounting principles applied on a consistent basis ("GAAP") (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements).
(b) There are no liabilities of the Company or any Company Subsidiary
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, in each case, that are required by GAAP to be set
forth on a consolidated balance sheet of the Company, other than:
(i) liabilities or obligations disclosed or provided for in the
Company Balance Sheet or disclosed in the notes thereto;
(ii) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated hereby; and
(iii) other liabilities or obligations, which would not, individually
or in the aggregate, be reasonably likely to have a Company Material
Adverse Effect.
4.9. INFORMATION TO BE SUPPLIED. (a) The information to be supplied by
the Company expressly for inclusion or incorporation by reference in the Proxy
Statement/Prospectus will (i) in the case of the Registration Statement, at the
time it becomes effective, not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading and (ii) in the case of the
remainder of the Proxy Statement/Prospectus, at the time of the mailing thereof,
at the time of the Company Shareholder Meeting and at the time of the Acquiror
Shareholder Meeting, not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. The Proxy Statement/Prospectus will comply (with
respect to information relating to the Company) as to form in all material
respects with the provisions of the Securities Act and the Exchange Act.
(b) Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any statements made or incorporated by reference in
the Proxy Statement/Prospectus based on information supplied by Acquiror or
MergerSub.
4.10. ABSENCE OF CERTAIN CHANGES. Since December 31, 1998, except as
otherwise expressly contemplated by this Agreement or disclosed in the Company
SEC Documents, the Company and each of its Subsidiaries have conducted their
business in the ordinary course consistent with past practice and there has not
been (a) any damage, destruction or other casualty loss (whether or not covered
by insurance) affecting the business or assets of the Company or any of its
Subsidiaries that, individually or in the aggregate, has had or would be
<PAGE>
reasonably likely to have a Company Material Adverse Effect or (b) any action,
event, occurrence, development or state of circumstances or facts that,
individually or in the aggregate, has had or would be reasonably likely to have
a Company Material Adverse Effect.
4.11. LITIGATION. There is no action, suit, investigation, arbitration
or proceeding pending, or to the Knowledge of the Company threatened, against or
affecting the Company or any of its Subsidiaries or any of their respective
assets or properties before any arbitrator or Governmental Entity that would,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect.
4.12. TAXES. Except as set forth in the Company Balance Sheet
(including the notes thereto), (i) all material tax returns, statements, reports
and forms (collectively, the "COMPANY RETURNS") required to be filed with any
taxing authority by, or with respect to, the Company and the Company
Subsidiaries have been filed in accordance with all applicable laws; (ii) the
Company and the Company Subsidiaries have timely paid all taxes shown as due and
payable on the Company Returns that have been so filed, and, as of the time of
filing, the Company Returns correctly reflected the facts regarding the income,
business, assets, operations, activities and the status of the Company and the
Company Subsidiaries (other than taxes which are being contested in good faith
and for which adequate reserves are reflected on the Company Balance Sheet);
(iii) the Company and the Company Subsidiaries have made reasonable provision
for all taxes payable by them for which no Company Return has yet been filed;
(iv) the charges, accruals and reserves for taxes with respect to the Company
and its Subsidiaries reflected on the Company Balance Sheet are adequate under
GAAP to cover the tax liabilities accruing through the date thereof; (v) except
as disclosed on Schedule 4.12, there is no action, suit, proceeding, audit or
claim now proposed or pending against or with respect to the Company or any of
the Company Subsidiaries in respect of any tax where there is a reasonable
possibility of a materially adverse determination; and (vi) except as disclosed
on Schedule 4.12, neither the Company nor any of the Company Subsidiaries has
been a member of an affiliated, consolidated, combined or unitary group, other
than one of which the Company was the common parent.
4.13. EMPLOYEE BENEFITS. (a) Schedule 4.13(a) of the Company Disclosure
Schedule contains a correct and complete list identifying each material
"employee benefit plan", as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), each material employment,
consulting, severance, retention, change-in-control or similar contract, plan,
arrangement, commitment or policy and each other contract, plan, arrangement,
commitment or policy (written or oral) providing for compensation, bonuses,
profit-sharing, stock option or other equity related rights or other forms of
incentive or deferred compensation, vacation benefits, insurance coverage
(including any self-insured arrangements), health, medical or life benefits,
disability benefits, workers' compensation, supplemental unemployment benefits,
severance benefits or post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance benefits) which is
maintained, administered or contributed to by the Company or any ERISA Affiliate
(as defined below) and covers any employee or former employee of the Company or
any Company Subsidiary or to which the Company or any Company Subsidiary is a
party or has any obligation to contribute. The material plans are referred to
collectively herein as the "COMPANY EMPLOYEE PLANS". Copies of the Company
Employee Plans (and, if applicable, related trust agreements, insurance
<PAGE>
contracts and other funding arrangements) and all amendments thereto and written
interpretations and/or summary plan descriptions thereof have been furnished to
Acquiror together with the most recent annual report (Form 5500 including, if
applicable, Schedule B thereto) and financial reports, if any, prepared in
connection with any such Plan. For purposes of this Section 4.13, "ERISA
AFFILIATE" of any Person means any other Person which, together with such
Person, would be treated as a single employer under Section 414 of the Code.
(b) Schedule 4.13(b) of the Company Disclosure Schedule separately
identifies each Company Employee Plan that constitutes a "multiemployer plan",
as defined in Section 3(37) of ERISA (a "MULTIEMPLOYER PLAN"), or that is
subject to Title IV of ERISA (a "RETIREMENT PLAN"). No "accumulated funding
deficiency", as defined in Section 412 of the Code or Section 302 of ERISA, has
been incurred with respect to any Company Employee Plan which is a Retirement
Plan, whether or not waived. To the Knowledge of the Company, no condition
exists and no event or transaction has occurred that would be reasonably likely
to constitute grounds for, or result in, the termination of or the appointment
of a trustee to administer any Company Employee Plan which is a Retirement Plan
or, with respect to any Company Employee Plan which is a Multiemployer Plan,
presents a material risk of a complete or partial withdrawal under Title IV of
ERISA and neither the Company nor any of its ERISA Affiliates has incurred any
liability under Title IV of ERISA arising in connection with the termination of,
or complete or partial withdrawal from, any plan covered or previously covered
by Title IV of ERISA that would, individually or in the aggregate, be reasonably
likely to have a Company Material Adverse Effect. To the Knowledge of the
Company, no condition exists and nothing has been done or omitted to be done and
no transaction or holding of any asset under or in connection with any Company
Employee Plan has occurred that would be reasonably likely to cause the Company
or any Company Subsidiary, or any officer or director of the Company or any
Company Subsidiary, to be subject to any liability under Title I or IV of ERISA
or liable for any tax or penalty pursuant to Section 4975 of the Code (assuming
the taxable period of any such transaction expired as of the date hereof) that
would be reasonably likely to have a Company Material Adverse Effect. No
proceedings have been instituted by any Governmental Entity, and none of the
Company, any Company Subsidiary, any ERISA Affiliate or any Multiemployer Plan
has taken any action, to terminate any Retirement Plan or Multiemployer Plan and
no proceedings have been instituted by any Governmental Entity to appoint a
trustee to administer any Retirement Plan. No "reportable event," within the
meaning of Section 4043 of ERISA has occurred or is reasonably expected to occur
(other than the transactions contemplated hereby) with respect to any Company
Employee Plan that, individually or in the aggregate, has had or would be
reasonably likely to have a Company Material Adverse Effect.
(c) Each Company Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. The Company has
furnished to Acquiror copies of the most recent Internal Revenue Service
determination letters with respect to each Company Employee Plan. Each Company
Employee Plan has been maintained in substantial compliance with its terms and
with the requirements prescribed by any and all statutes, orders, rules and
regulations, including ERISA and the Code, which are applicable to such Company
Employee Plan.
<PAGE>
(d) Except as disclosed on Schedule 4.13(d), there is no contract,
agreement, plan or arrangement covering any employee or former employee of the
Company or any Company Subsidiary that, individually or collectively, would be
reasonably likely to give rise to the payment of any amount that would not be
deductible pursuant to the terms of Sections 162(m) or 280G of the Code. Except
as disclosed on Schedule 4.13(d), the consummation of the transactions
contemplated hereby, either alone or in combination with any other event that
has occurred or is expected to occur, will not (i) entitle any employee or
former employee of the Company or any Company Subsidiary to any payment, (ii)
increase the amount of compensation due any such employee or (iii) accelerate
the time of vesting of any compensation, equity incentive or other benefit.
(e) Except as disclosed on Schedule 4.13(e) there has been no amendment
to, written interpretation or announcement (whether or not written) relating to,
or change in employee participation or coverage under, any Company Employee Plan
which would increase materially the expense of maintaining such Company Employee
Plan above the level of the expense incurred in respect thereof for the fiscal
year ended December 31, 1999. Except as disclosed on Schedule 4.13(e), neither
the Company nor any Company Subsidiary has announced any plan or commitment
(whether or not legally binding) to create any new or additional Company
Employee Plan, or amend, modify or terminate any Company Employee Plan.
(f) Except as disclosed on Schedule 4.13(f), neither the Company nor
any Company Subsidiary has any obligations to provide retiree health and life
insurance or other retiree death benefits under any Company Employee Plan, other
than benefits mandated by Section 4980B of the Code or under applicable State
law, and each such Company Employee Plan may be amended or terminated without
incurring liability thereunder.
(g) Except as disclosed on Schedule 4.13(g), no Company Employee Plan
is under audit or is the subject of an audit or investigation by the Internal
Revenue Service, the Department of Labor, the Pension Benefit Guaranty
Corporation or any other Governmental Entity, nor, to the Knowledge of the
Company, is any such audit or investigation threatened or pending.
4.14. COMPLIANCE WITH LAWS; LICENSES, PERMITS AND REGISTRATIONS. (a) To
the Knowledge of the Company, neither the Company nor any of its Subsidiaries is
in violation of, or has violated, any applicable provisions of any laws,
statutes, ordinances, regulations, rules, writs, judgments, injunctions, orders,
consent decrees, permits, licenses or other authorizations applicable to it or
its business or operations, except for violations which would not, individually
or in the aggregate, be reasonably likely to have a Company Material Adverse
Effect.
(b) The Company and each of its Subsidiaries has all permits, licenses,
approvals, authorizations of and registrations with and under all federal,
state, local and foreign laws, and from all Governmental Entities required by
the Company and each of its Subsidiaries to carry on their respective businesses
as currently conducted, except where the failure to have the permits, licenses,
approvals, authorizations or registrations would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect.
<PAGE>
4.15. TITLE TO PROPERTIES. (a) The Company and each of its Subsidiaries
have good and marketable title to, or valid leasehold interests in, all their
properties and assets except for those which are no longer used or useful in the
conduct of their businesses and except for defects in title, easements,
restrictive covenants and similar Liens, encumbrances or impediments that, in
the aggregate, do not materially interfere with the ability of the Company and
its Subsidiaries to conduct their business, taken as a whole, as currently
conducted. All of these assets and properties, other than assets and properties
in which the Company or any of its Subsidiaries has leasehold interests, are
free and clear of all Liens, except for Liens that, in the aggregate, do not and
will not materially interfere with the ability of the Company and its
Subsidiaries to conduct their business, taken as a whole, as currently
conducted.
(b) Except as would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect, (i) the Company and
each of its Subsidiaries are in compliance with the terms of all leases to which
they are a party and under which they are in occupancy, and all such leases are
in full force and effect and (ii) the Company and each of its Subsidiaries enjoy
peaceful and undisturbed possession under all such leases.
4.16. INTELLECTUAL PROPERTY. Except as would not, individually or in
the aggregate, be reasonably likely to have a Company Material Adverse Effect,
the Company and each of its Subsidiaries own or have a valid license to use each
trademark, service mark, trade name, mask work, invention, patent, trade secret,
copyright, know-how (including any registrations or applications for
registration of any of the foregoing) or any other similar type of proprietary
intellectual property right (collectively, the "INTELLECTUAL PROPERTY")
necessary to carry on the business (the "COMPANY BUSINESS") of the Company and
the Company Subsidiaries, taken as a whole, as currently conducted (the "COMPANY
INTELLECTUAL PROPERTY"). To the Knowledge of the Company, neither the Company
nor any of its Subsidiaries has received any challenge to any Company
Intellectual Property, nor has there been, or is there, any claim alleging that
the conduct of the Company Business by the Company and its Subsidiaries, or the
use by the Company and its Subsidiaries of any Company Intellectual Property,
infringes, violates or misappropriates the Intellectual Property of any other
Person, that, in any such case would, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect.
4.17. ENVIRONMENTAL MATTERS. (a) Except as disclosed on Schedule 4.17
and as would not, individually or in the aggregate, be reasonably likely to have
a Company Material Adverse Effect, to the Knowledge of the Company, (i) no
written notice, notification, demand, request for information, citation,
summons, complaint or administrative or judicial order has been received by, and
no investigation, action, claim, suit, proceeding or review is pending or
threatened by any Person against, the Company or any of its Subsidiaries, with
respect to any applicable Environmental Law and (ii) the Company and its
Subsidiaries are and have been in compliance with all applicable Environmental
Laws.
(b) For purposes of this Section 4.17 and Section 5.15, the term
"ENVIRONMENTAL LAWS" means any federal, state or foreign statutes, laws,
judicial decisions, regulations, ordinances, rules, judgments, orders, codes,
injunctions, permits or governmental agreements relating to human health and
safety, the environment, natural resources, the release or threatened release of
hazardous substances or to pollutants, contaminants, wastes or chemicals.
<PAGE>
4.18. FINDERS' FEES; OPINIONS OF FINANCIAL ADVISOR. (a) Except for
Goldman, Sachs & Co., there is no investment banker, broker, finder or other
intermediary which has been retained by, or is authorized to act on behalf of,
the Company or any of its Subsidiaries which might be entitled to any fee or
commission from Acquiror or any of its Affiliates upon consummation of the
transactions contemplated by this Agreement.
(b) The Company has received the opinion of Goldman, Sachs & Co., dated
as of the date hereof, to the effect that, as of such date, the Merger
Consideration is fair to the holders of Company Shares (other than Acquiror and
any Acquiror Subsidiary) from a financial point of view.
4.19. REQUIRED VOTE; BOARD APPROVAL. (a) The only vote of the holders
of any capital stock of the Company required by law, rule or regulation to
approve this Agreement, the Merger and/or any of the other transactions
contemplated hereby is the affirmative vote ("COMPANY SHAREHOLDER APPROVAL") of
the holders of two-thirds of the outstanding Company Shares in favor of the
adoption of this Agreement and the Merger.
(b) The Company's Board of Directors has unanimously (i) determined
that this Agreement and the transactions contemplated hereby, including the
Merger, are in the best interests of the Company and its shareholders, (ii)
approved this Agreement and the transactions contemplated hereby and (iii)
resolved to recommend to such shareholders that they vote in favor of adopting
and approving this Agreement and the Merger in accordance with the terms hereof.
4.20. STATE TAKEOVER STATUTES. Sections 180.1130 to 180.1133 of the
Wisconsin BCL, Sections 180.1140 to 180.1144 of the Wisconsin BCL, Section
180.1150 of the Wisconsin BCL, Section 6.05 of Chapter DFI of the Wisconsin
Administrative Code and Chapter 552 of the Wisconsin Statutes are inapplicable
to the Merger, this Agreement and the transactions contemplated hereby. No other
"control share acquisition", "fair price" or other anti-takeover laws or
regulations enacted under state or federal laws in the United States apply to
this Agreement or any of the transactions contemplated hereby.
4.21. TAX TREATMENT. To the Company's Knowledge, there is no reason why
the Merger will not be able to qualify as a 368 Reorganization.
4.22. EMPLOYEE RELATIONS. (a) Except as set forth on Schedule 4.22(a),
since January 1, 1998, there has not occurred or, to the Company's Knowledge,
been threatened, any strikes, slowdowns, picketing, work stoppages, concerted
refusals to work overtime or other similar labor activities with respect to any
employee of the Company or any Company Subsidiary. Except as set forth on
Schedule 4.22(a), no grievance, arbitration, unfair labor practice charge or
other proceeding relating to any employees of the Company or any Company
Subsidiary is pending, and, to the Company's knowledge, no such grievance,
arbitration, charge or proceeding is threatened that, in any such case, would,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect.
<PAGE>
(b) Except as set forth on Schedule 4.22(b), the employees employed by
the Company and the Subsidiaries are not represented by any labor union or other
labor representative. Except as set forth on Schedule 4.22(b), there are no
collective bargaining agreements or other similar arrangements in effect with
respect to such employees, and to the Company's knowledge, there are no persons
attempting to represent or organize or purporting to represent for bargaining
purposes any employees employed by the Company or any of its Subsidiaries.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Except as disclosed in (i) the Acquiror Disclosure Schedule attached
hereto (which disclosure schedule shall make a specific reference to the
particular Section or Subsection of this Agreement to which exception is being
taken) or (ii) the Acquiror Public Documents filed or made prior to the date
hereof, Acquiror represents and warrants to the Company that:
5.1. CORPORATE EXISTENCE AND POWER. Each of Acquiror and MergerSub is a
corporation duly incorporated, validly existing and, if applicable, in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers required to carry on its business as now conducted. Acquiror is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes qualification necessary, except where the
failure to qualify would not, individually or in the aggregate, be reasonably
likely to have an Acquiror Material Adverse Effect. Acquiror has heretofore made
available to the Company true and complete copies of Acquiror's articles of
association as currently in effect. Since the date of its incorporation,
MergerSub has not engaged in any activities other than in connection with or as
contemplated by this Agreement.
5.2. CORPORATE AUTHORIZATION. The execution, delivery and performance
by Acquiror and MergerSub of this Agreement and the consummation by Acquiror and
MergerSub of the transactions contemplated hereby are within the corporate
powers of Acquiror and MergerSub and, except for the Acquiror Shareholder
Approval, have been duly authorized by all necessary corporate action. Assuming
that this Agreement constitutes the valid and binding obligation of the Company,
this Agreement constitutes a valid and binding agreement of each of Acquiror and
MergerSub, enforceable in accordance with its terms.
5.3. GOVERNMENTAL AUTHORIZATION. The execution, delivery and
performance by Acquiror and MergerSub of this Agreement and the consummation by
Acquiror and MergerSub of the transactions contemplated hereby require no action
by or in respect of, or filing with, any Governmental Entity other than (a)
those set forth in clauses (a) through (e) of Section 4.3 and (b) other
consents, approvals, actions, orders, authorizations, registrations,
declarations and filings which, if not obtained or made, would not, individually
or in the aggregate, (i) be reasonably likely to have an Acquiror Material
Adverse Effect or (assuming for this purpose that the Effective Time had
occurred) a Company Material Adverse Effect, or (ii) prevent or materially
<PAGE>
impair the ability of Acquiror and MergerSub to consummate the transactions
contemplated by this Agreement.
5.4. NON-CONTRAVENTION. The execution, delivery and performance by
Acquiror and MergerSub of this Agreement and the consummation by Acquiror and
MergerSub of the transactions contemplated hereby do not and will not (a)
contravene or conflict with the articles of association of Acquiror or the
articles of incorporation or bylaws of MergerSub, (b) assuming compliance with
the matters referred to in Section 5.3, contravene or conflict with any
provision of law, regulation, judgment, injunction, order or decree binding upon
or applicable to Acquiror or any Acquiror Subsidiary, (c) result in any
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default under (or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any material benefit under) any
agreement, contract or other instrument or obligation binding upon Acquiror or
any Acquiror Subsidiary or any property, asset, license, franchise, permit or
other authorization held by Acquiror or any Acquiror Subsidiary, or (d) result
in the creation or imposition of any Lien on any asset of Acquiror or any
Acquiror Subsidiary other than, in the case of each of (b), (c) and (d), any
items that would not, individually or in the aggregate, (x) be reasonably likely
to have an Acquiror Material Adverse Effect or (y) materially impair the ability
of Acquiror or MergerSub to consummate the transactions contemplated by this
Agreement.
5.5. CAPITALIZATION OF ACQUIROR AND MERGERSUB. (a) Under the Articles
of Association of Acquiror, Acquiror's issued share capital may not be less than
FIM 2,500,000,000 nor more than FIM 10,000,000,000. As of the date hereof, the
issued capital stock of Acquiror consists of 208,933,041 Series A Shares,
nominal value 10 Finnish marks per share (the "ACQUIROR SERIES A SHARES"), and
550,870,356 Series R Shares (the "ACQUIROR SERIES R Shares"). As of the date
hereof, there are outstanding warrants to purchase 2,724,000 Acquiror Series R
Shares at a subscription price of FIM 45.57 each.
(b) As of the date hereof, except as set forth in this Section 5.5 and
except for changes since December 31, 1999 resulting from the exercise of stock
options outstanding on that date, there are no outstanding (i) shares of capital
stock or other voting securities of Acquiror, (ii) securities of Acquiror
convertible into or exchangeable for shares of capital stock or voting
securities of Acquiror and (iii) options, warrants, securities, calls,
commitments, agreements or other rights of any character obligating Acquiror or
any Acquiror Subsidiary to issue, deliver or sell or cause to be issued,
delivered or sold any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of Acquiror or
obligating the Acquiror or any Acquiror Subsidiary to grant, extend, accelerate
the vesting of or enter into any such option, warrant, security, call,
commitment, agreement or other right (the items in clauses (i), (ii) and (iii)
being referred to collectively as the "ACQUIROR SECURITIES"). There are no
outstanding obligations of Acquiror or any Acquiror Subsidiary to repurchase,
redeem or otherwise acquire any Acquiror Securities.
(c) The Acquiror Shares to be issued as part of the Merger
Consideration when issued and delivered in accordance with the terms of this
Agreement, will have been duly authorized, validly issued, fully paid and
nonassessable and free of any preemptive or other similar right.
<PAGE>
(d) The authorized capital stock of MergerSub consists solely of 1,000
MergerSub Shares, par value $0.01 per share, of which, as of the date hereof,
1,000 were issued and outstanding. All outstanding MergerSub Shares have been
duly authorized and validly issued and are fully paid and nonassessable, free of
any preemptive or other similar right, except as provided by Section
180.0622(2)(b) of the Wisconsin BCL. 5.6. ACQUIROR PUBLIC DOCUMENTS. (a)
Acquiror has filed all reports, filings, registration statements and other
documents required to be filed by it with the Finnish Trade Registry and the
Finnish Financial Supervision since December 31, 1997.
(b) As of its filing date, each Acquiror Public Document complied as to
form in all material respects with the applicable requirements of the Finnish
Securities Act and/or the Finnish Companies Act, as the case may be.
(c) No Acquiror Public Document filed since December 31, 1997
contained, as of its filing date or effective date, as applicable, any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
5.7. FINANCIAL STATEMENTS; NO MATERIAL UNDISCLOSED LIABILITIES. (a) The
audited consolidated financial statements and unaudited consolidated interim
financial statements of Acquiror included in the Acquiror Annual Reports and the
Acquiror Quarterly Reports fairly present in all material respects, in
conformity with International Accounting Standards ("IAS") (except as may be
indicated in the notes thereto and except for the Acquiror Annual Report
relating to the fiscal year ended December 31, 1997 and the Acquiror Quarterly
Reports relating to the first three quarters of 1998, which were prepared using
Finnish generally accepted accounting principles), the consolidated financial
position of Acquiror and its consolidated Subsidiaries as of the dates thereof
and their consolidated results of operations and changes in financial position
for the periods then ended (subject to normal year-end adjustments in the case
of any unaudited interim financial statements).
(b) There are no liabilities of Acquiror or any Acquiror Subsidiary of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise that are required by IAS to be set forth on a
consolidated balance sheet of Acquiror, other than:
(i) liabilities or obligations disclosed or provided for in the
Acquiror Balance Sheet (including the notes thereto);
(ii) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated hereby; and
(iii) other liabilities or obligations, which would not, individually
or in the aggregate, be reasonably likely to have an Acquiror Material
Adverse Effect.
<PAGE>
5.8. INFORMATION TO BE SUPPLIED. (a) The information to be supplied by
Acquiror expressly for inclusion or incorporation by reference in the Proxy
Statement/Prospectus will (i) in the case of the Registration Statement, at the
time it becomes effective, not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading and (ii) in the case of the
remainder of the Proxy Statement/Prospectus, at the time of the mailing thereof,
at the time of the Company Shareholder Meeting and at the time of the Acquiror
Shareholder Meeting, not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. The Proxy Statement/Prospectus will comply (with
respect to information relating to Acquiror) as to form in all material respects
with the provisions of the Securities Act and the Exchange Act.
(b) Notwithstanding the foregoing, Acquiror makes no representation or
warranty with respect to any statements made or incorporated by reference in the
Proxy Statement/Prospectus with respect to information supplied by the Company.
5.9. ABSENCE OF CERTAIN CHANGES. Since December 31, 1998, except as
otherwise expressly contemplated by this Agreement, Acquiror and the Acquiror
Subsidiaries have conducted their business in the ordinary course consistent
with past practice and there has not been (a) any damage, destruction or other
casualty loss (whether or not covered by insurance) affecting the business or
assets of Acquiror or any Acquiror Subsidiary that, individually or in the
aggregate, has had or would be reasonably likely to have an Acquiror Material
Adverse Effect or (b) any action, event, occurrence, development or state of
circumstances or facts that, individually or in the aggregate, has had or would
be reasonably likely to have an Acquiror Material Adverse Effect.
5.10. LITIGATION. There is no action, suit, investigation, arbitration
or proceeding pending against, or to the Knowledge of Acquiror threatened
against, Acquiror or any Acquiror Subsidiary or any of their respective assets
or properties before any arbitrator or Governmental Entity that would,
individually or in the aggregate, be reasonably likely to have an Acquiror
Material Adverse Effect.
5.11. TAXES. Except as set forth in the Acquiror Balance Sheet
(including the notes thereto), (i) all tax returns, statements, reports and
forms (collectively, the "ACQUIROR RETURNS") required to be filed with any
taxing authority by, or with respect to, Acquiror and the Acquiror Subsidiaries
have been filed in accordance with all applicable laws, (ii) Acquiror and the
Acquiror Subsidiaries have timely paid all taxes shown as due and payable on the
Acquiror Returns that have been so filed, and, as of the time of filing, the
Acquiror Returns correctly reflected the facts regarding the income, business,
assets, operations, activities and the status of Acquiror and the Acquiror
Subsidiaries (other than taxes which are being contested in good faith and for
which adequate reserves are reflected on the Acquiror Balance Sheet), (iii)
Acquiror and the Acquiror Subsidiaries have made reasonable provision for all
taxes payable by them for which no Acquiror Return has yet been filed, (iv) the
charges, accruals and reserves for taxes with respect to Acquiror and its
Subsidiaries reflected on the Acquiror Balance Sheet are
<PAGE>
adequate under IAS to cover the tax liabilities accruing through the date
thereof, (v) there is no action, suit, proceeding, audit or claim now proposed
or pending against or with respect to Acquiror or any of the Acquiror
Subsidiaries in respect of any tax where there is a reasonable possibility of a
materially adverse determination and (vi) neither Acquiror nor any of the
Acquiror Subsidiaries has been a member of an affiliated, consolidated, combined
or unitary group, other than one of which Acquiror was the common parent.
5.12. COMPLIANCE WITH LAWS; LICENSES, PERMITS AND REGISTRATIONS. (a) To
the Knowledge of Acquiror, neither Acquiror nor any Acquiror Subsidiary is in
violation of, or has violated, any applicable provisions of any laws, statutes,
ordinances, regulations, rules, writs, judgments, injunctions, orders, consent
decrees, permits, licenses or other authorizations applicable to it or its
business or operations, except for violations which would not, individually or
in the aggregate, be reasonably likely to have, an Acquiror Material Adverse
Effect.
(b) Each of Acquiror and the Acquiror Subsidiaries has all permits,
licenses, approvals, authorizations of and registrations with and under all
federal, state, local and foreign laws, and from all Governmental Entities
required by Acquiror and the Acquiror Subsidiaries to carry on their respective
businesses as currently conducted, except where the failure to have any such
permits, licenses, approvals, authorizations or registrations would not,
individually or in the aggregate, be reasonably likely to have an Acquiror
Material Adverse Effect.
5.13. TITLE TO PROPERTIES. (a) Acquiror and each Acquiror Subsidiary
have good and marketable title to, or valid leasehold interests in, all their
properties and assets except for those which are no longer used or useful in the
conduct of their businesses or as have been disposed of in the ordinary course
of business and except for defects in title, easements, restrictive covenants
and similar Liens, encumbrances or impediments that, in the aggregate, do not
materially interfere with the ability of Acquiror and the Acquiror Subsidiaries
to conduct their business, taken as a whole, as currently conducted. All of
these assets and properties, other than assets and properties in which Acquiror
or any Acquiror Subsidiary has leasehold interests, are free and clear of all
Liens, except for Liens that, in the aggregate, do not and will not materially
interfere with the ability of Acquiror and the Acquiror Subsidiaries to conduct
their business, taken as a whole, as currently conducted.
(b) Except as would not, individually or in the aggregate, be
reasonably likely to have an Acquiror Material Adverse Effect, (i) Acquiror and
each Acquiror Subsidiary are in compliance with the terms of all leases to which
they are a party and under which they are in occupancy, and all of these leases
are in full force and effect and (ii) Acquiror and each Acquiror Subsidiary
enjoy peaceful and undisturbed possession under all such leases.
5.14. INTELLECTUAL PROPERTY. Except as would not, individually or in
the aggregate, be reasonably likely to have an Acquiror Material Adverse Effect,
Acquiror and the Acquiror Subsidiaries own or have a valid license to use all
Intellectual Property necessary to carry on the business (the "ACQUIROR
BUSINESS") of Acquiror and the Acquiror Subsidiaries, taken as a whole, as
currently conducted (collectively, the "ACQUIROR INTELLECTUAL Property"). To the
<PAGE>
Knowledge of Acquiror, neither Acquiror nor any Acquiror Subsidiary has received
any challenge to any Acquiror Intellectual Property , nor has there been, or is
there, any claim alleging that the conduct of the Acquiror Business by Acquiror
and the Acquiror Subsidiaries, or the use by the Acquiror and the Acquiror
Subsidiaries of any Acquiror Intellectual Property, infringes, violates or
misappropriates the Intellectual Property of any other Person, that, in any
case, would, individually or in the aggregate, be reasonably likely to have an
Acquiror Material Adverse Effect.
5.15. ENVIRONMENTAL MATTERS. Except as would not, individually or in
the aggregate, be reasonably likely to have an Acquiror Material Adverse Effect,
to the Knowledge of Acquiror, (i) no written notice, notification, demand,
request for information, citation, summons, complaint or administrative or
judicial order has been received by, and no investigation, action, claim, suit,
proceeding or review is pending or threatened by any person against, Acquiror or
any Acquiror Subsidiary, with respect to any applicable Environmental Law and
(ii) Acquiror and the Acquiror Subsidiaries are and have been in compliance with
all applicable Environmental Laws.
5.16. FINDERS' FEES. Except for Salomon Smith Barney Inc., whose fees
will be paid by Acquiror, there is no investment banker, broker, finder or other
intermediary who might be entitled to any fee or commission from Acquiror or any
of its Affiliates upon consummation of the transactions contemplated by this
Agreement.
5.17. REQUIRED VOTE; BOARD RECOMMENDATION. (a) The only vote of the
holders of any class or series of capital stock of Acquiror required by law,
rule or regulation to approve this Agreement, the Merger and/or any of the other
transactions contemplated hereby are the affirmative vote of the holders of
two-thirds by number and voting power of the Acquiror Series A Shares and the
Acquiror Series R Shares present and voting as a single class at the Acquiror
Shareholder Meeting (as defined in Section 7.2) in favor of the issuance of the
Acquiror Shares pursuant to the Merger and the other transactions contemplated
hereby, including the actions described in Section 2.3(a) (the "ACQUIROR
SHAREHOLDER APPROVAL").
(b) Acquiror's Board of Directors has unanimously (i) determined that
this Agreement and the transactions contemplated hereby, including the Merger
and the issuance of the Acquiror Shares pursuant to the Merger, are in the best
interests of Acquiror and its shareholders, (ii) approved this Agreement, and
the transactions contemplated hereby and (iii) resolved to recommend to such
shareholders that they vote in favor of the issuance of the Acquiror Shares
pursuant to the Merger, in accordance with the terms hereof.
5.18. AVAILABILITY OF FUNDS. Purchaser has available, and will have
available on the Closing Date, sufficient funds to enable Purchaser to
consummate the transactions contemplated by this Agreement.
5.19. TAX TREATMENT. To Acquiror's Knowledge, there is no reason why
the Merger will not be able to qualify as a 368 Reorganization.
<PAGE>
ARTICLE 6
COVENANTS OF THE COMPANY
The Company agrees as set forth below.
6.1. COMPANY INTERIM OPERATIONS. Except as set forth in the Company
Disclosure Schedule or as otherwise expressly contemplated hereby, without the
prior written consent of Acquiror (which consent shall not be unreasonably
withheld or delayed), from the date hereof until the Effective Time, the Company
shall, and shall cause each of its Subsidiaries to, conduct their business in
all material respects in the ordinary course consistent with past practice and
shall use commercially reasonable efforts to (i) preserve intact its present
business organization, (ii) maintain in effect all material foreign, federal,
state and local licenses, approvals and authorizations, including, all material
licenses and permits that are required for the Company or any of its
Subsidiaries to carry on its business and (iii) preserve existing relationships
with its material customers, lenders, suppliers and others having material
business relationships with it. Without limiting the generality of the
foregoing, except as set forth in the Company Disclosure Schedule or as
otherwise expressly contemplated by this Agreement, from the date hereof until
the Effective Time, without the prior written consent of Acquiror (which consent
shall not be unreasonably withheld or delayed), the Company shall not, nor shall
it permit any of its Subsidiaries to:
(a) amend the Company's or any Company Subsidiary's articles of
incorporation or by-laws or equivalent documents;
(b) split, combine, subdivide, redeem or reclassify any shares of
capital stock of the Company or declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock, or redeem, repurchase or otherwise acquire or
offer to redeem, repurchase, or otherwise acquire any of its securities, except
(i) for regular quarterly cash dividends (having customary record and payment
dates not in excess of $0.22 per Company Share, (ii) for regular dividends by
wholly owned Company Subsidiaries or (iii) pursuant to the existing terms of any
award under an existing Company Employee Plan;
(c) (i) issue, deliver or sell, or authorize the issuance, delivery or
sale of, any shares of its capital stock or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any capital
stock, grant any additional options to purchase Company Shares, or grant to any
Person any right to acquire any shares of the Company's capital stock or any
right, the value of which is based on the value of Company Shares, other than in
connection with the Company Employee Plans or other benefit plans or
arrangements existing on the date hereof and other than the issuance of Company
Shares upon the exercise of stock options outstanding on the date hereof in
accordance with their present terms or (ii) amend in any material respect any
term of any outstanding security of the Company or any Company Subsidiary;
(d) acquire (whether pursuant to merger, stock or asset purchase or
otherwise) in one transaction or series of related transactions (i) except in
the ordinary course of business
<PAGE>
consistent with past practice, any assets (including any equity interests)
having a fair market value in excess of $10 million or (ii) all or substantially
all of the equity interests of any Person or any business or division of any
Person having a fair market value in excess of $10 million;
(e) sell, lease, encumber or otherwise dispose of any assets, other
than (i) sales in the ordinary course of business consistent with past practice,
(ii) equipment and property no longer used in the operation of the Company's
business and (iii) assets related to discontinued operations;
(f) incur (which shall not include entering into credit agreements,
lines of credit or similar arrangements until the Company or any of its
Subsidiaries becomes liable with respect to any indebtedness for borrowed money
thereunder or guarantees thereof) any indebtedness for borrowed money, guarantee
any indebtedness, issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any of its Subsidiaries or
guarantee any debt securities of others, except in the ordinary course of
business consistent with past practice (which shall include borrowings under the
Company's existing credit agreements and, consistent with past practice, the
Company's existing unrated commercial paper program and overnight borrowings);
(g) except in the ordinary course of business, amend, modify or
terminate any material contract, agreement or arrangement of the Company or any
of its Subsidiaries or otherwise waive, release or assign any material rights,
claims or benefits of the Company or any of its Subsidiaries thereunder;
(h) (i) except in the ordinary course of business consistent with past
practice or as required by law or the current terms of an existing agreement or
other authorization disclosed in Schedule 4.13 of the Company Disclosure
Schedule, increase the amount of compensation of any current or former director,
officer or employee or make any increase in or commitment to increase any
employee benefits or vest, fund or pay any pension or retirement allowance other
than as required by the current terms of a Company Employee Plan, (ii) except as
required by law, the current terms of an agreement or other authorization
existing on the date hereof or of the Company severance policy disclosed in
Schedule 4.13 of the Company Disclosure Schedule, grant any severance or
termination pay to any director, officer or employee of the Company or any
Company Subsidiary, (iii) adopt, amend, modify (except as may be required by
law), enter into or commit to any additional employee benefit plan or, except in
the ordinary course of business, make any contribution to any existing plan,
(iv) increase the benefits payable under any existing severance or termination
pay policies or employment agreements or (v) take any affirmative action to
accelerate the vesting of any stock-based compensation;
(i) change the Company's methods of accounting in effect at December
31, 1998, except as required by changes in GAAP or by Regulation S-X of the
Exchange Act, as concurred in by its independent public accountants;
(j) other than in connection with transactions otherwise permitted by
this Section 6.1, incur any capital expenditures or any obligations or
liabilities in respect thereof, except for those (i) contemplated by the capital
expenditures budgets for the Company and the Company
Subsidiaries made available to Acquiror, (ii) incurred in the ordinary course of
business of the Company and the Company Subsidiaries or (iii) not otherwise
described in clauses (i) and/or (ii) which, in the aggregate, do not exceed $10
million;
(k) (i) enter into any agreement or arrangement that limits or
otherwise restricts the Company, any Company Subsidiary or any of their
respective Affiliates or any successor thereto from engaging or competing in any
line of business or in any location, which agreement or arrangement would be
material to the business of the Company and the Company Subsidiaries taken as a
whole or (ii) except in the ordinary course of business consistent with past
practice, amend, modify or terminate any material contract, agreement or
arrangement of the Company or any Company Subsidiary or otherwise waive, release
or assign any material rights, claims or benefits of the Company or any Company
Subsidiary thereunder;
(l) settle, or propose to settle, any litigation, investigation,
arbitration, proceeding or other claim that is material to the business of the
Company and the Company Subsidiaries, taken as a whole, other than the payment,
discharge or satisfaction, in the ordinary course of business consistent with
past practice, of liabilities (i) recognized or disclosed in the most recent
consolidated financial statements (or notes thereto) of the Company included in
the Company SEC Documents or (ii) incurred since the date of such financial
statements in the ordinary course of business consistent with past practice;
(m) create or incur any material Lien on any material asset other than
in the ordinary course of business consistent with past practice or other than
in connection with the purchase of such asset;
(n) make any material loan, advance or capital contribution to or
investment in any Person, other than loans, advances or capital contributions
to, or investments in, wholly owned Company Subsidiaries made in the ordinary
course of business consistent with past practice;
(o) other than in the ordinary course of business consistent with past
practice, (i) make any tax election or take any position on any tax return filed
on or after the date of this Agreement or adopt any method thereof that is
inconsistent with elections made, positions taken or methods used in preparing
or filing similar returns in prior periods or (ii) enter into any settlement or
compromise of any tax liability that in either case is material to the business
of the Company and the Company Subsidiaries, taken as a whole; or
(p) agree, resolve or commit to do any of the foregoing;
provided that the limitations set forth in Sections 6.1(a) through 6.1(p) shall
not apply to any action, transaction or event occurring exclusively between the
Company and any wholly owned Company Subsidiary or between any wholly owned
Company Subsidiaries.
6.2. SHAREHOLDER MEETING. The Company shall cause a meeting of its
shareholders (the "COMPANY SHAREHOLDER MEETING") to be duly called and held as
soon as reasonably practicable for the purpose of obtaining the Company
Shareholder Approval. Unless otherwise required by its fiduciary duties (as
determined in good faith by a majority of its members after consultation with
<PAGE>
outside legal counsel to the Company) (i) the Company's Board of Directors shall
recommend approval and adoption by its shareholders of this Agreement (the
"COMPANY Recommendation"), (ii) neither the Company's Board of Directors nor any
committee thereof shall amend, modify, withdraw, condition or qualify the
Company Recommendation in a manner adverse to Acquiror or take any action or
make any statement inconsistent with the Company Recommendation and (iii) the
Company shall take all lawful action to solicit the Company Shareholder
Approval.
6.3. ACQUISITION PROPOSALS; BOARD RECOMMENDATION.
(a) The Company agrees that it shall not, nor shall it permit any
Company Subsidiary to, nor shall it authorize or knowingly permit any officer,
director, employee, investment banker, attorney, accountant, agent or other
advisor or representative of the Company or any Company Subsidiary, directly or
indirectly, to (i) solicit or initiate the submission of any Acquisition
Proposal, (ii) participate in any discussions or negotiations regarding, or
furnish to any Person any information with respect to, or take any other action
knowingly to facilitate any inquiries or the making of any proposal that
constitutes or that would reasonably be expected to lead to any Acquisition
Proposal, (iii) grant any waiver or release under any standstill or similar
agreement with respect to any class of the Company's equity securities or (iv)
enter into any agreement with respect to any Acquisition Proposal, other than in
the manner contemplated by Section 6.3(d); provided, however, that the Company
may take any action(s) described in any of the foregoing clauses in respect of a
Person, if it receives from such Person an unsolicited bona fide written
Acquisition Proposal that the Company's Board of Directors determines in good
faith (after consultation with an investment bank of nationally recognized
reputation) is reasonably likely to lead to the delivery of a Superior Proposal
and if the Company's Board of Directors determines in good faith, after
consultation with outside legal counsel to the Company, that it is obligated to
take such action(s) in order to comply with its fiduciary duties under
applicable law; provided, further, that, the Company shall have provided the
notice contemplated by Section 6.3(c) and shall comply with Section 6.3(d). The
Company shall cease and cause to be terminated immediately all existing
discussions or negotiations with any Persons conducted heretofore with respect
to, or that could be reasonably expected to lead to, any Acquisition Proposal.
(b) Unless the Company's Board of Directors has previously withdrawn,
or is concurrently therewith withdrawing, the Company Recommendation in
accordance with Section 6.2, neither the Company's Board of Directors nor any
committee thereof shall recommend any Acquisition Proposal to the Company
shareholders. Notwithstanding the foregoing, nothing contained in this Section
6.3(b) or elsewhere in this Agreement shall prevent the Company's Board of
Directors from complying with Rule 14e-2 under the 1934 Act with respect to any
Acquisition Proposal or making any disclosure required by applicable law.
(c) The Company shall notify Acquiror promptly (but in no event later
than the second Business Day) after receipt by the Company or any Company
Subsidiary (or any of their respective directors, officers, agents or advisors)
of any Acquisition Proposal or any request for nonpublic information or for
access to the properties, books or records of the Company or any request for a
waiver or release under any standstill or similar agreement, by any person that
has made an Acquisition Proposal. The notice shall indicate the identity of the
offeror and the terms
<PAGE>
and conditions of the proposal or request. The Company shall keep Acquiror
informed, on a reasonably current basis, of the status (including amendments or
proposed amendments) of any Acquisition Proposal or request.
(d) Pursuant to the terms of Section 10.1, either Acquiror or the
Company may terminate this Agreement, if the Company's Board of Directors shall
have determined (i) to approve or recommend an Acquisition Proposal after
concluding that the Acquisition Proposal constitutes a Superior Proposal and
(ii) to enter into a binding agreement concerning the Acquisition Proposal;
provided, however, that the Company may not exercise its right to terminate this
Agreement under this Section 6.3(d) and Section 10.1(c)(ii), unless (i) the
Company shall have provided to Acquiror at least five Business Days' prior
written notice that its Board of Directors has authorized the termination and
intends to terminate this Agreement pursuant to this Section 6.3(d) and Section
10.1(c)(ii), specifying the material terms and conditions of the Acquisition
Proposal, (ii) Acquiror does not make, within five Business Days of receiving
the notice, an offer such that a majority of the Company's Board of Directors
determines that (x) the foregoing Acquisition Proposal no longer constitutes a
Superior Proposal or (y) its fiduciary duties no longer require it to take such
action(s) and (iii) on or prior to such termination, the Company shall have paid
to Acquiror the Termination Fee (as defined in Section 10.3(b)); provided,
further, that Acquiror may exercise its right to terminate under this Section
6.3(d) and Section 10.1(d)(iii) within five Business Days after receiving the
notice contemplated by this Section 6.3(d). In connection with the foregoing,
the Company agrees that it will (A) not enter into a binding agreement with
respect to such an Acquisition Proposal until the termination of this Agreement
in accordance with its terms and (B) notify the Acquiror promptly, if its
intention to enter into such an agreement shall change at any time after such
notification.
6.4. AFFILIATE AGREEMENTS. Not later than the 15th day prior to the
mailing of the Proxy Statement/Prospectus, the Company shall deliver to Acquiror
a schedule of each person, that, to its Knowledge, is or is reasonably likely to
be, as of the date of the Company Shareholder Meeting, deemed to be an
"affiliate" of it (each, a "COMPANY AFFILIATE") as that term is used in Rule 145
under the Securities Act. The Company shall use its best efforts to cause each
person who may be deemed to be a Company Affiliate to execute and deliver to
Acquiror on or before the date of mailing of the Proxy Statement/Prospectus an
agreement in a form reasonably acceptable to Acquiror.
6.5. TERMINATION OF DRIP. Promptly following the date hereof, the
Company shall take all steps necessary to suspend the operation of, or to
terminate, its Dividend Reinvestment and Share Purchase Plan, so that no
additional Company Shares are issued thereunder prior to the Effective Time.
<PAGE>
ARTICLE 7
COVENANTS OF ACQUIROR
The Acquiror agrees as set forth below.
7.1. ACQUIROR INTERIM OPERATIONS. Except as set forth in the Acquiror
Disclosure Schedule or as otherwise expressly contemplated hereby, without the
prior consent of the Company (which consent shall not be unreasonably withheld
or delayed), from the date hereof until the Effective Time, Acquiror shall and
shall cause each of the Acquiror Subsidiaries to, conduct their business in all
material respects in the ordinary course consistent with past practice and shall
use commercially reasonable efforts to (i) preserve intact its present business
organization, (ii) maintain in effect all material foreign, federal, state and
local licenses, approvals and authorizations, including, without limitation, all
material licenses and permits that are required for Acquiror or any Acquiror
Subsidiary to carry on its business and (iii) preserve existing relationship
with its material customers, lenders, suppliers and others having material
business relationships with it. Without limiting the generality of the
foregoing, except as otherwise expressly contemplated by this Agreement, from
the date hereof until the Effective Time, without the prior consent of the
Company (which consent shall not be unreasonably withheld or delayed), Acquiror
shall not, nor shall it permit any Acquiror Subsidiary to:
(a) make any amendment to Acquiror's articles of association that
changes any material term or provision of the Acquiror Shares;
(b) make any material changes to MergerSub's articles of incorporation;
(c) engage in any material repurchase at a premium, recapitalization,
restructuring or reorganization with respect to Acquiror's capital stock,
including, without limitation, by way of any extraordinary dividend on, or other
extraordinary distributions with respect to, Acquiror's capital stock;
(d) acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of or equity in, or by any other manner, any
Person or any business or division thereof, or otherwise acquire any assets,
unless Acquiror concludes in good faith that such acquisition or the entering
into of a definitive agreement relating to or the consummation of such
transaction would not (i) impose any material delay in the obtaining of, or
significantly increase the risk of not obtaining, any authorizations, consents,
orders, declarations or approvals of any Governmental Entity necessary to
consummate the Merger or the expiration or termination of any applicable waiting
period, (ii) significantly increase the risk of any Governmental Entity entering
an order prohibiting the consummation of the Merger or (iii) significantly
increase the risk of not being able to remove any such order on appeal or
otherwise; or
(e) agree, resolve or otherwise commit to do any of the foregoing.
<PAGE>
7.2. SHAREHOLDER MEETING; BOARD RECOMMENDATION. Subject to the proviso
in Section 3.3(a), Acquiror shall cause a meeting of its shareholders (the
"ACQUIROR SHAREHOLDER MEETING") to be duly called and held as soon as reasonably
practicable for the purpose of obtaining the Acquiror Shareholder Approval.
Pursuant thereto, (i) Acquiror's Board of Directors shall recommend (the
"ACQUIROR RECOMMENDATION") approval and adoption by its shareholders of the
issuance of Acquiror Shares pursuant to the Merger and the election of George W.
Mead as a member of Acquiror's Board of Directors as contemplated by Section
2.3(a), (ii) neither Acquiror's Board of Directors nor any committee thereof
shall amend, modify, withdraw, condition or qualify the Acquiror Recommendation
in a manner adverse to the Company or take any action or make any statement
inconsistent with the Acquiror Recommendation and (iii) Acquiror shall take all
lawful action to solicit the Acquiror Shareholder Approval. In the event that
the Merger Consideration consists of all Cash Consideration pursuant to the
proviso in Section 3.3(a), this provision shall be of no further force or
effect, and Acquiror's obligation under Section 2.3(a) shall cease.
7.3. DIRECTOR AND OFFICER LIABILITY. (a) Acquiror and the Surviving
Corporation agree that the Surviving Corporation shall adopt prior to the
Effective Time, in its Articles of Incorporation and bylaws, the same
indemnification obligations as those set forth in the Company's articles of
incorporation and bylaws, in each case as of the date of this Agreement, and
that such provisions shall not be amended, repealed or otherwise modified for a
period of six years after the Effective Time in any manner that would adversely
affect the rights thereunder of the individuals who on or prior to the Effective
Time were directors, officers, employees or agents of the Company or the Company
Subsidiaries.
(b) To the fullest extent permitted under applicable law, after the
Effective Time, MergerSub and Acquiror shall, and Acquiror shall cause the
Surviving Corporation to, indemnify, defend and hold harmless, to the fullest
extent permitted under applicable law, each present and former director or
officer of the Company and each Company Subsidiary and each person who served at
the request of the Company or any Company Subsidiary as a director, officer,
trustee, partner or fiduciary of another Person, pension or other employee
benefit plan or enterprise (collectively, the "INDEMNIFIED PARTIES") against all
costs and expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and settlement amounts paid in connection
with any claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), arising out of or pertaining to any action
or omission in their capacity as director, officer, trustee, partner or
fiduciary in each case occurring on or before the Effective Time (including the
transactions contemplated by this Agreement). Without limiting the foregoing, in
the event of any claim, action, suit, proceeding or investigation, (i) Acquiror
and the Surviving Corporation shall (x) periodically advance reasonable fees and
expenses (including attorneys fees) with respect to the foregoing and (y) pay
the reasonable fees and expenses of counsel selected by each Indemnified Party,
which counsel shall be reasonably satisfactory to Acquiror and the Surviving
Corporation, promptly after statements therefor are received (unless the
Surviving Corporation shall elect to defend such action) and (ii) Acquiror and
the Surviving Corporation, as applicable, shall cooperate in the defense of any
matter; provided, however, that neither Acquiror nor the Surviving Corporation
shall be liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld or delayed).
<PAGE>
(c) For six years from the Effective Time, the Surviving Corporation
shall provide to the Company's and each Company Subsidiary's directors and
officers liability insurance protection of the same kind and scope as that
provided by the Company's directors' and officers' liability insurance policies
in effect on the date hereof; provided, however, that in no event shall the
Surviving Corporation be required to expend in any one year an amount in excess
of 200% of the annual premiums currently paid by the Company for such insurance,
which current annual premium the Company represents and warrants to be $103,000;
and provided, further, that if the annual premiums of such insurance exceed such
amount, the Surviving Corporation shall obtain a policy with the greatest
coverage available for a cost not exceeding such amount.
(d) If Acquiror or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity in a
consolidation or merger or (ii) transfers all or substantially all its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successors and assigns of Acquiror or the Surviving
Corporation, as the case may be, honor the indemnification obligations set forth
in this Section 7.3.
(e) The obligations of the Surviving Corporation and Acquiror under
this Section 7.3 shall not be terminated or modified in a manner which will
adversely affect any director, officer or other person to whom this Section 7.3
applies without the consent of the affected director, officer or other person
(it being expressly agreed that each director, officer or other person to whom
this Section 7.3 applies shall be third-party beneficiaries of this Section
7.3).
7.4. EMPLOYEE BENEFITS. (a) During the period commencing at the
Effective Time and ending on the second anniversary thereof, Acquiror shall
cause the Surviving Corporation and the Company Subsidiaries to provide eligible
employees of the Company and the Company Subsidiaries, during the period of
employment of such employees with the Surviving Corporation or Company
Subsidiaries, with salary and benefits under employee benefit plans that are no
less favorable in the aggregate than those currently provided by the Company and
the Company Subsidiaries under the Company Employee Plans disclosed on the
Company Disclosure Schedule to their respective employees. For purposes of any
employee benefit plan or arrangement maintained by Acquiror, the Surviving
Corporation or any Acquiror Subsidiary in which employees of the Company or a
Company Subsidiary become eligible to participate, Acquiror and the Surviving
Corporation shall recognize (or cause to be recognized) the service of such
employees with the Company and its Subsidiaries and any predecessor entities
(and any other service credited by the Company under similar benefit plans) for
purposes of vesting, eligibility to participate and severance to the extent such
service was recognized under a comparable Company Employee Plan provided,
however, that solely to the extent necessary to avoid duplication of benefits,
amounts payable under employee benefit plans provided by Acquiror, the Surviving
Corporation or an Acquiror Subsidiary may be reduced by amounts payable under
similar Company Employee Plans with respect to the same periods of service).
From and after the Effective Time, in the case of any employee benefit plan of
Acquiror or any Acquiror Subsidiary that is an employee health or life insurance
plan and in which employees of the Company or any Company Subsidiary become
eligible to participate (any such plan, an
<PAGE>
"ACQUIROR WELFARE PLAN"), Acquiror shall cause such Acquiror Welfare Plan to (i)
waive any pre-existing conditions of any such employee that was covered under
the Company Employee Plan in which such employee was a participant immediately
prior to commencement of participation in the Acquiror Welfare Plan and (ii)
recognize any deductibles or out-of-pocket expenses paid by any such employee
pursuant to the Company Employee Plan in which such employee was a participant
immediately prior to commencement of participation in the Acquiror Welfare Plan
in the calendar year in which such commencement of participation occurs. The
provisions of this Section 7.4 shall not create in any employee or former
employee of the Company or any Company Subsidiary any rights to employment or
continued employment with Acquiror, the Surviving Corporation or the Company or
any of their respective Subsidiaries or Affiliates or infringe upon the right of
any such entity to terminate the employment of any such employee for any reason
or no reason.
(b) During the six-month period following the Effective Time, Acquiror
shall cause the Surviving Corporation and the Company Subsidiaries to provide at
least 30 days' advance written notice of the termination of employment ("ADVANCE
NOTICE") of any employees of the Company or any Company Subsidiary other than
any such termination for cause.
(c) During the period commencing at the Effective Time and ending on
the first anniversary thereof, Acquiror shall cause the Surviving Corporation
and the Acquiror Subsidiaries to honor, in accordance with its terms, the
Company's Human Resources Policy-Severance disclosed on the Company Disclosure
Schedule. In addition, Acquiror shall cause the Surviving Corporation and the
Acquiror Subsidiaries to honor, in accordance with their terms, as in effect on
the date hereof any employment, change of control, severance, retirement or
termination agreement between the Company or any Company Subsidiary, and any
officer, director or employee of the Company or any Company Subsidiary disclosed
on the Company Disclosure Schedule, including the Company's retention incentive
program and the Change in Control Agreements, dated October 26, 1999, as
amended, between the Company and certain of its officers.
(d) Prior to the Effective Time, the Company shall take all appropriate
actions to ensure that no "restricted date" will be deemed to occur for purposes
of Appendix F to the Consolidated Salaried Employees' Retirement Plan or
Appendix E to the Consolidated Employees' Retirement Plan by reason of the
transactions contemplated hereby, alone or in conjunction with another event.
7.5. STOCK EXCHANGE LISTING. Acquiror shall use its reasonable best
efforts to cause the Acquiror Shares to be issued in connection with the Merger
to be approved for listing on the NYSE, subject to official notice of issuance.
7.6. CONDUCT OF MERGERSUB. Acquiror will take all action necessary to
cause MergerSub to perform its obligations under this Agreement and to
consummate the Merger on the terms and conditions set forth in this Agreement,
including, without limitation, voting all of the MergerSub Shares in favor of
adoption of this Agreement and the Merger.
<PAGE>
7.7. TRANSFER TAXES. All state, local or foreign sales, use, real
property transfer, stock transfer or similar taxes (including any interest or
penalties with respect thereto) attributable to the Merger (collectively, the
"TRANSFER TAXES") shall be timely paid by Acquiror.
ARTICLE 8
COVENANTS OF ACQUIROR AND THE COMPANY
The parties hereto agree as set forth below.
8.1. REASONABLE BEST EFFORTS. (a) Subject to the terms and conditions
hereof, each party will use reasonable best efforts to take, or cause to be
taken, all actions, to file, or caused to be filed, all documents, including
without limitation the notification form under the HSR Act, an application for
an exemption under PUHCA and an application for consent under WPUHCA, and to do,
or cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement as promptly as
practicable. Acquiror and the Company shall have the right to review in advance,
and to the extent reasonably practicable each will consult the other on, all the
information relating to the other and its subsidiaries, that appear in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the Merger; provided, however, that with
respect to documents that one party reasonably believes should not be disclosed
to the other party, such party shall instead furnish those documents to counsel
for the other party pursuant to a mutually satisfactory confidentiality
agreement. In exercising the foregoing right, each of the Company and Acquiror
shall act reasonably and as promptly as reasonably practicable.
(b) Acquiror and the Company shall promptly respond to any request for
additional information pursuant to the HSR Act. Upon the terms and subject to
the provisions hereof, Acquiror and the Company shall each use all reasonable
best efforts to resolve objections, if any, as may be asserted by any
Governmental Entity with respect to the Merger under any antitrust or trade or
regulatory laws or regulations of any Governmental Entity, which, in the case of
Acquiror, will, except as set forth below, include if necessary to resolve such
objections, offering, and agreeing to enter into necessary agreements, to sell,
license or otherwise dispose of, or hold separate or otherwise divest itself of,
all or any portion of Acquiror's businesses or assets or any portion of the
businesses or assets of any of its subsidiaries or any portion of the businesses
or assets of the Company or the Company's subsidiaries; provided, however, that
nothing in this Section 8.1 or otherwise shall require Acquiror to agree to
divest the assets of Consolidated Water Power Company other than the retail
sales assets; and provided, however, that nothing in this Section 8.1 shall
require Acquiror to agree to (i) the imposition of conditions or (ii) the
requirement of divestiture that, in the case of clauses (i) and (ii), would, in
Acquiror's reasonable judgment, be reasonably likely to have an Acquiror
Material Adverse Effect or a Company Material Adverse Effect or to materially
adversely impact the economic, strategic or business benefits of the
transactions contemplated hereby, it being understood that a divestiture of the
retail sales assets of Consolidated Water Power Company would not have such an
impact or otherwise be deemed likely to have a Material Adverse Effect. Acquiror
shall reasonably consult with the Company and, subject to being permitted by the
Governmental Entity to do so,
<PAGE>
the Company shall have the right to attend and participate in any telephone
calls or meetings that Acquiror or MergerSub have with any person with regard to
this Agreement.
8.2. CERTAIN FILINGS; COOPERATION IN RECEIPT OF CONSENTS. (a) Promptly
after the date hereof, Acquiror and the Company shall prepare and Acquiror shall
file with the SEC the Registration Statement, in which the Proxy
Statement/Prospectus will be included as Acquiror's prospectus. Each of the
Company and Acquiror shall use reasonable best efforts to have the Registration
Statement declared effective under the Securities Act as promptly as practicable
after the filing and to keep the Registration Statement effective as long as is
necessary to consummate the Merger. Each of the Company and Acquiror shall mail
the Proxy Statement/Prospectus to their respective shareholders as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act and, if necessary, after the Proxy Statement/Prospectus shall
have been so mailed, promptly circulate amended, supplemental or supplemented
proxy material, and, if required in connection therewith, resolicit proxies.
Acquiror shall also take any action required to be taken under any applicable
state securities or blue sky laws in connection with the issuance of Acquiror
Shares in the Merger.
(b) No amendment or supplement to the Proxy Statement/Prospectus will
be made by the Company or Acquiror without the approval of the other party,
which approval will not be unreasonably withheld or delayed. Each party will
advise the other party, promptly after it receives notice thereof, of the time
when the Registration Statement has become effective or any supplement or
amendment has been filed, the issuance of any stop order, the suspension of the
qualification of the Acquiror Shares issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Proxy Statement/Prospectus or comments thereon and responses thereto or
requests by the SEC for additional information. If at any time prior to the
Effective Time, the Company or Acquiror discovers any information relating to
either party, or any of their respective Affiliates, officers or directors, that
should be set forth in an amendment or supplement to the Proxy
Statement/Prospectus, so that the document will not include any misstatement of
a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, then the party that discovers any misleading information shall
promptly notify the other parties hereto and an appropriate amendment or
supplement describing the information shall be promptly filed with the SEC and,
to the extent required by law or regulation, disseminated to the shareholders of
the Company and Acquiror.
(c) The Company and Acquiror shall cooperate with one another in (i)
determining whether any other action by or in respect of, or filing with, any
Governmental Entity is required, or any actions, consents, approvals or waivers
are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated hereby, (ii)
seeking any consents, approvals or waivers, taking any actions, or making any
filings, furnishing information required in connection therewith and seeking
promptly to obtain any consents, approvals or waivers and (iii) setting a
mutually acceptable date for the Company Shareholder Meeting and the Acquiror
Shareholder Meeting so as to enable them to occur, to the extent practicable, on
the same date. Each party shall permit the other party to review any
communication given by it to, and consult with each other in advance of any
<PAGE>
meeting or conference with, any Governmental Entity or, in connection with any
proceeding by a private party, with any other Person, and to the extent
permitted by the applicable Governmental Entity or other Person, give the other
party the opportunity to attend and participate in the meetings and conferences,
in each case in connection with the transactions contemplated hereby.
8.3. PUBLIC ANNOUNCEMENTS. The parties shall consult with each other
before issuing any press release or making any public statement with respect to
this Agreement and the transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any national securities
exchange, will not issue any such press release or make any public statement
prior to such consultation.
8.4. ACCESS TO INFORMATION; NOTIFICATION OF CERTAIN MATTERS. (a) From
the date hereof until the Effective Time and subject to applicable law, the
Company and Acquiror shall (i) give to the other party, its counsel, financial
advisors, auditors and other authorized representatives reasonable access to its
offices, properties, books and records, (ii) furnish or make available to the
other party, its counsel, financial advisors, auditors and other authorized
representatives any financial and operating data and other information as those
Persons may reasonably request and (iii) instruct its employees, counsel,
financial advisors, auditors and other authorized representatives to cooperate
with the reasonable requests of the other party in its investigation. Any
investigation pursuant to this Section shall be conducted in a manner which will
not to interfere unreasonably with the conduct of the business of the other
party. Unless otherwise required by law, each of the Company and Acquiror will
hold, and will cause its respective officers, employees, counsel, financial
advisors, auditors and other authorized representatives to hold any nonpublic
information obtained in any investigation in confidence in accordance with
Section 8.8. No information or knowledge obtained in any investigation pursuant
to this Section 8.4 shall affect or be deemed to modify any representation or
warranty made by any party hereunder.
(b) Each party hereto shall give prompt notice to the other of (i) any
communication received by such party from, or given by such party to, any
Governmental Entity in connection with any of the transactions contemplated
hereby and (ii) any actions, suits, claims, investigations or proceedings
commenced or, to its Knowledge, threatened against, relating to or involving or
otherwise affecting such party or any of its Subsidiaries that, if pending on
the date of this Agreement, would have been required to have been disclosed
pursuant to Article IV or Article V, as the case may be, or that relate to the
consummation of the transactions contemplated by this Agreement; provided, in
each case, however, that delivery of any notice pursuant to this Section 8.4(b)
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
8.5. FURTHER ASSURANCES. At and after the Effective Time, the officers
and directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or MergerSub, any deeds, bills
of sale, assignments or assurances and to take and do, in the name and on behalf
of the Company or MergerSub, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and all right,
<PAGE>
title and interest in, to and under any of the rights, properties or assets of
the Company acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
8.6. TAX TREATMENT. Each party shall use its reasonable best efforts to
cause the Merger to qualify as a 368 Reorganization, including the reporting
requirements contained in U.S. Treasury Regulation Section 1.367(a)-3(c)(6), and
will not take any action reasonably likely to cause the Merger not so to
qualify.
8.7. INTEGRATION COMMITTEE. Acquiror recognizes that the Company has a
talented group of officers and employees that will be important to the future
growth of the combined companies. In recognition of the foregoing, promptly
after the date hereof, Acquiror will establish an Integration Committee composed
of senior executive officers of both Acquiror and the Company, as selected by
Acquiror's President, who will have direct access to him and will be responsible
for proposing alternatives and recommendations to him regarding the matters and
issues arising in connection with the integration of the two companies and their
respective businesses, assets and organizations (including matters arising in
connection with the matters contemplated by Section 7.3).
8.8. CONFIDENTIALITY. Prior to the Effective Time and after any
termination of this Agreement, each party hereto will hold, and will use its
reasonable best efforts to cause its officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
other parties hereto furnished to the party in connection with the transactions
contemplated by this Agreement, except to the extent that the information can be
shown to have been (a) previously known on a nonconfidential basis by the party,
(b) in the public domain through no fault of the party or (c) later lawfully
acquired by such party from sources other than any of the other parties hereto;
provided that a party may disclose information to its officers, directors,
employees, accountants, counsel, consultants, advisors and agents in connection
with the transactions contemplated by this Agreement, so long as those Persons
are informed by the party of the confidential nature of information and are
directed by the party to treat such information confidentially. Each party's
obligation to hold any information in confidence shall be satisfied, if it
exercises the same care with respect to the information as it would take to
preserve the confidentiality of its own similar information. If this Agreement
is terminated, each party hereto will, and will use its reasonable best efforts
to cause its officers, directors, employees, accountants, counsel, consultants,
advisors and agents to, destroy or deliver to the party from whom the material
was obtained, upon request, all documents and other materials, and all copies
thereof, obtained from the other party from the other parties in connection with
this Agreement that are subject to this confidentiality requirement.
<PAGE
ARTICLE 9
CONDITIONS TO MERGER
9.1. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of
the Company, Acquiror and MergerSub to consummate the Merger are subject to the
satisfaction of the following conditions:
(a) each of (i) the Company Shareholder Approval and (ii) the Acquiror
Shareholder Approval shall have been obtained;
(b) (i) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, no stop order suspending
the effectiveness of the Registration Statement shall have been issued by the
SEC and no proceedings for that purpose shall have been initiated by the SEC and
not concluded or withdrawn and (ii) all state securities or blue sky
authorizations necessary to carry out the transactions contemplated hereby shall
have been obtained and be in effect;
(c) (i) any applicable waiting period under the HSR Act or Canadian
Competition Act or any other applicable comparable foreign merger control
authority relating to the Merger shall have expired or been earlier terminated
and (ii) if required by applicable law, the parties shall have received a
decision from the European Commission under Regulation 4064/89 that the proposed
Merger and any matters arising therefrom fall within either Article 6.1(a) or
Article 6.1(b) of such Regulation and that, in any event, the Merger will not be
referred to any competent authority or dealt with by the European Commission
pursuant to Article 9.3 of such Regulation; and
(d) no Governmental Entity of competent authority or jurisdiction shall
have issued any order, injunction or decree, or taken any other action then in
effect, which restrains, enjoins or otherwise prohibits the consummation of the
Merger.
9.2. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of
the Company to consummate the Merger are subject to the satisfaction of the
following further conditions:
(a) (i) Acquiror and MergerSub each shall have performed in all
material respects all of its obligations hereunder required to be performed by
it at or prior to the time of the filing of the Articles of Merger, (ii) (A) the
representations and warranties of Acquiror contained in this Agreement that are
qualified by reference to an Acquiror Material Adverse Effect shall be true and
correct when made and at and as of the time of filing the Articles of Merger, as
if made at and as of such time and (B) all other representations and warranties
of Acquiror shall have been true and correct, disregarding for these purposes
any qualification or exception for materiality, when made and at and as of the
time of the filing of the Articles of Merger as if made at and as of such time,
except for inaccuracies which, individually or in the aggregate, are not
reasonably likely to have an Acquiror Material Adverse Effect and (iii) the
Company shall have received a certificate signed by the Chief Executive Officer
or Chief Financial Officer of Acquiror to the foregoing effect;
<PAGE>
(b) the Company shall have received an opinion of McDermott, Will &
Emery counsel to the Company, dated as of the Closing Date, to the effect that,
on the basis of facts, representations and assumptions set forth in such
opinion, (a) the Merger constitutes a reorganization within the meaning of
Section 368(a) of the Code, (b) Acquiror will be treated as a corporation under
Section 367(a)(1) of the Code with respect to each transfer of property thereto
pursuant to the Merger, and (c) accordingly, for U.S. federal income tax
purposes, (i) no gain or loss will be recognized by the Company as a result of
the Merger and (ii) no gain or loss will be recognized by a stockholder of the
Company in respect of the receipt of Acquiror Shares pursuant to the Merger. In
rendering its opinion, such counsel may require and rely upon representations
contained in letters from the Company, Acquiror and MergerSub. Counsel's opinion
shall not address the tax consequences applicable to any stockholder of the
Company who, immediately after the Merger, will be a "five percent transferee
shareholder" with respect to Acquiror within the meaning of U.S. Treasury
Regulation Section 1.367(a)-3(c)(5); and
(c) the Parties shall have obtained or made all consents, approvals,
actions, orders, authorizations, registrations, declarations, announcements and
filings contemplated by Sections 4.3 and 5.3, which if not obtained or made (i)
would render consummation of the Merger illegal or (ii) (assuming the Effective
Time had occurred) would be reasonably likely to have an Acquiror Material
Adverse Effect.
9.3. CONDITIONS TO THE OBLIGATIONS OF ACQUIROR AND MERGERSUB. The
obligations of Acquiror and MergerSub to consummate the Merger are subject to
the satisfaction of the following further conditions:
(a) (i) the Company shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) (A) the representations and warranties of the Company
contained in this Agreement that are qualified by reference to a Company
Material Adverse Effect shall be true and correct when made and at and as of the
time of the filing of the Articles of Merger, as if made at and as of such time
and (B) all other representations and warranties of the Company shall have been
true and correct, disregarding for these purposes any qualification or exception
for materiality, when made and at and as of the time of filing of the Articles
of Merger, as if made as of such time, except for such inaccuracies which,
individually or in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect, and (iii) Acquiror shall have received a certificate
signed by the Chief Executive Officer, President or Chief Financial Officer of
the Company to the foregoing effect;
(b) Acquiror shall have received an opinion of Cleary, Gottlieb, Steen
& Hamilton, counsel to Acquiror, dated as of the Closing Date, to the effect
that, on the basis of facts, representations and assumptions set forth in such
opinion, (a) the Merger constitutes a reorganization within the meaning of
Section 368(a) of the Code, (b) Acquiror will be treated as a corporation under
Section 367(a)(1) of the Code with respect to each transfer of property thereto
pursuant to the Merger, and (c) accordingly, for U.S. federal income tax
purposes, (i) no gain or loss will be recognized by Acquiror as a result of the
Merger and (ii) no gain or loss will be recognized by a stockholder of the
Company in respect of the receipt of Acquiror Shares pursuant to the Merger. In
rendering its opinion, such counsel may require and rely upon
<PAGE>
representations contained in letters from the Company, Acquiror and MergerSub.
Counsel's opinion shall not address the tax consequences applicable to any
stockholder of the Company who, immediately after the Merger, will be a "five
percent transferee shareholder" with respect to Acquiror within the meaning of
U.S. Treasury Regulation Section 1.367(a)-3 (c)(5); and
(c) Acquiror shall have obtained all consents, or been granted all
exemptions, that it, in its reasonable judgment, determines are necessary in
connection with the transactions contemplated by this Agreement, including the
indirect acquisition of Consolidated Water Power Company, (i) from or by the SEC
under or with respect to PUHCA and (ii) from or by the Wisconsin Public Service
Commission under or with respect to WPUHCA, including, in the case of (ii), as a
result of the actions contemplated in the first proviso to Section 8.1(b). The
parties shall have obtained or made all other consents, approvals, actions,
orders, authorizations, registrations, declarations, announcements and filings
contemplated by Sections 4.3 and 5.3 which if not obtained or made (i) would
render consummation of the Merger illegal or (ii) (assuming the Effective Time
had occurred) would be reasonably likely to have an Acquiror Material Adverse
Effect or a Company Material Adverse Effect.
ARTICLE 10
TERMINATION
10.1. TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time by written notice, whether before or after the Company
Shareholder Approval and/or the Acquiror Shareholder Approval shall have been
obtained:
(a) by mutual written agreement of Acquiror and the Company;
(b) by either Acquiror or the Company, if
(i) the Merger shall not have been consummated by December 31, 2000
(the "END DATE"); provided, however, that the right to terminate this
Agreement under this Section 10.1(b)(i) shall not be available to any party
whose breach of any provision of this Agreement has resulted in the failure
of the Merger to occur on or before the End Date;
(ii) there shall be any law or regulation that makes consummation of
the Merger illegal or otherwise prohibited or any judgment, injunction,
order or decree of any Governmental Entity having competent jurisdiction
enjoining the Company, Acquiror or MergerSub from consummating the Merger
is entered and the judgment, injunction, judgment or order shall have
become final and nonappealable and, prior to that termination, the parties
shall have used reasonable best efforts to resist, resolve or lift, as
applicable, the law, regulation, judgment, injunction, order or decree;
(iii) at the Acquiror Shareholder Meeting (including any adjournment
or postponement thereof), the Acquiror Shareholder Approval shall not have
been obtained; or
<PAGE>
(iv) at the Company Shareholder Meeting (including any adjournment or
postponement thereof), the Company Shareholder Approval shall not have been
obtained.
(c) by the Company, (i) if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of Acquiror or
MergerSub set forth in this Agreement shall have occurred which would cause the
condition set forth in Section 9.2(a) not to be satisfied, and such condition
shall be incapable of being satisfied by the End Date; or (ii) as contemplated
by Section 6.3(d); or
(d) by Acquiror, (i) if the Company's Board of Directors shall have (A)
amended, modified, withdrawn, conditioned or qualified the Company
Recommendation in a manner adverse to Acquiror and/or (B) recommended any
Acquisition Proposal to the Company's shareholders; (ii) pursuant to the terms
of Section 6.3(d); or (iii) if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of the Company set
forth in this Agreement shall have occurred which would cause the condition set
forth in Section 9.3(a) not to be satisfied, and the condition is incapable of
being satisfied by the End Date.
10.2. EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 10.1 (including any termination by way of Section 6.3(d)), there
shall be no liability or obligation on the part of Acquiror, the Company,
MergerSub, or any of their respective officers, directors, shareholders, agents
or Affiliates, except (i) as set forth in Section 10.3 which (without limiting
in any respect the respective rights and obligations of the parties set forth in
Section 11.8 prior to any termination in accordance with the terms of this
Agreement) shall be the sole and exclusive remedy of the parties hereto in the
event of such termination and (ii) no such termination shall relieve any party
hereto of any liability or damages resulting from any breach of this Agreement
unless a Termination Fee or Acquiror Termination Fee has been paid pursuant to
Section 10.3; provided that the provisions of Sections 8.8, 10.2, 10.3, 11.1,
11.2, 11.4, 11.5, 11.7, 11.8, 11.9 and 11.10 of this Agreement shall remain in
full force and effect and survive any termination of this Agreement.
10.3. FEES AND EXPENSES. (a) Except as set forth in this Section 10.3,
all fees and expenses incurred in connection herewith and the transactions
contemplated hereby shall be paid by the party incurring expenses, whether or
not the Merger is consummated.
(b) If this Agreement is terminated pursuant to Section 10.1(c)(ii), or
Section 10.1(d)(i)(B), or Section 10.1(d)(ii), or Section 10.1(d)(iii) (but only
if the breach shall have been a willful and material breach of Section 6.3 by
the Company, any Company Subsidiary or any of their respective officers,
directors, employees, advisors or other agents) the Company shall (i) pay to
Acquiror a termination fee equal to $120,000,000 (the "TERMINATION FEE") and
(ii) reimburse Acquiror for its actual, documented out-of-pocket expenses
incurred to third parties in connection with the transactions contemplated
hereby not to exceed $1,000,000.
(c) If this Agreement is terminated by either party pursuant to Section
10.1(b)(i) or Section 10.1(b)(iv) and (i) prior to such termination, any Person
or "group" (as defined in Section 13(d)(3) of the Exchange Act) shall have
publicly announced an intention (whether or not conditional) to make an
Acquisition Proposal and (ii) concurrently with or within 12 months after
<PAGE>
termination, the Company enters into an agreement with respect to or consummates
a Third Party Acquisition Event, the Company shall (x) pay to Acquiror the
Termination Fee within one Business Day of the earlier of entering into any such
agreement and the consummation of a Third Party Acquisition Event and (y)
reimburse Acquiror at that time for Acquiror's actual, documented out-of-pocket
expenses incurred to third parties in connection with the transactions
contemplated hereby not to exceed $1,000,000.
A "THIRD PARTY ACQUISITION EVENT" means the consummation of an
Acquisition Proposal involving the purchase of a majority of either the equity
securities of the Company or of the consolidated assets of the Company and the
Company Subsidiaries, taken as a whole, or any transaction that, if it had been
proposed prior to the termination of this Agreement would have constituted an
Acquisition Proposal.
(d) If this Agreement is terminated pursuant to Section 10.1(d)(i)(A),
(i) the Company shall (A) pay to Acquiror 50% of the Termination Fee and (B)
reimburse Acquiror for Acquiror's actual, documented out-of-pocket expenses
incurred to third parties in connection with the transaction contemplated by
this Agreement not to exceed $1,000,000 and (ii) if concurrently with or within
12 months after termination the Company enters into an agreement with respect to
or consummates of a Third Party Acquisition Event, then the Company shall pay to
Acquiror 50% of the Termination Fee within one Business Day of the earlier of
entering into such agreement and the consummation of the transaction
contemplated by such Third Party Acquisition Event.
(e) If this Agreement is terminated pursuant to Section 10.1(b)(iii)
and (x) prior to such termination, any Person or "group" (as defined in Section
13(d)(3) of the Exchange Act) shall have publicly announced an intention
(whether or not conditional) to make a proposal for a merger, consolidation,
share exchange, business combination, reorganization, recapitalization,
liquidation, dissolution or other similar transaction involving Acquiror, or for
any purchase or other acquisition of 15% or more of the assets or any class of
equity securities of Acquiror (an "ACQUIROR ACQUISITION PROPOSAL") and (y)
concurrently with or within 12 months after termination, Acquiror enters into an
agreement with respect to, or a Person consummates, a purchase of a majority of
either the equity securities of Acquiror or of the consolidated assets of
Acquiror and the Acquiror Subsidiaries, taken as a whole, Acquiror shall (A) pay
to the Company a fee (the "ACQUIROR TERMINATION FEE") equal to $40,000,000
within one Business Day or the earlier of entering into any such agreement and
the consummation of any such purchase and (B) reimburse the Company at that time
for its actual, documented out-of-pocket expenses incurred to third parties in
connection with the transactions contemplated hereby not to exceed $1,000,000.
(f) Any payment of the Termination Fee or the Acquiror Termination Fee
(and reimbursement of expenses) pursuant to this Section 10.3 shall be made in
immediately available funds to an account specified by the party entitled to
receipt thereof within one Business Day after termination of this Agreement (or
as otherwise expressly set forth in this Agreement). If one party fails to pay
to (or reimburse) the other promptly any fee or expense due hereunder (including
the Termination Fee or the Acquiror Termination Fee), the defaulting party shall
pay the costs and expenses (including legal fees and expenses) in connection
with any action, including the filing of any lawsuit or other legal action,
<PAGE>
taken to collect payment, together with interest on the amount of any unpaid fee
and/or expense at the publicly announced "prime rate" as published in The Wall
Street Journal from time to time from the date the fee was required to be paid
to the date it is paid.
ARTICLE 11
MISCELLANEOUS
11.1. NOTICES. Except as otherwise expressly set forth in Section
6.3(c), all notices, requests and other communications to any party hereunder
shall be in writing (including facsimile or similar writing) and shall be given,
if to Acquiror or MergerSub, to:
Stora Enso Oyj
Kanavaranta 1
P.O. Box 309
FIN-00101 Helsinki
Finland
Attention: General Counsel
Facsimile: 011-358-20-46-21471
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006-1470
Attention: William A. Groll
Facsimile: (212) 225-3999
if to the Company, to:
Consolidated Papers, Inc.
231 First Avenue North
P.O. Box 8050
Wisconsin Rapids, Wisconsin 54495-8050
Attention: President
Facsimile: (715) 422-3203
<PAGE>
with a copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Attention: Robert A. Schreck, Jr., P.C.
Facsimile: (312) 984-7700
or such other address or facsimile number as a party may hereafter specify for
the purpose by notice to the other parties hereto. Each notice, request or other
communication shall be effective (a) if given by facsimile, when the facsimile
is transmitted to the facsimile number specified in this Section and the
appropriate facsimile confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
11.2. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS AFTER THE
EFFECTIVE TIME. The representations and warranties contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement. The covenants contained in
Articles 2 and 3 and Sections 7.3, 7.4, 7.7, 8.5, 8.7, 11.2, 11.4, 11.5, 11.6,
11.7, 11.8, 11.9 and 11.10 shall survive the Effective Time.
11.3. AMENDMENTS; NO WAIVERS. (a) Any provision of this Agreement may
be amended or waived prior to the Effective Time, if, and only if, the amendment
or waiver is in writing and signed, in the case of an amendment, by the Company,
Acquiror and MergerSub or, in the case of a waiver, by the party against whom
the waiver is to be effective; provided that (i) after the Company Shareholder
Approval, no such amendment or waiver shall, without the further approval of the
shareholders, be made that would require such approval under any applicable law,
rule or regulation and (ii) after the Acquiror Shareholder Approval, no such
amendment or waiver shall, without the further approval of the shareholders, be
made that would require such approval under any applicable law, rule or
regulation.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
11.4. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of the other parties hereto, except that Acquiror or MergerSub may
transfer or assign to any wholly owned Acquiror Subsidiary the right to enter
into the transactions contemplated by this Agreement; provided that no
assignment shall be permitted if it would delay or impede the Merger or any of
the other transactions contemplated by this Agreement, and any transfer or
assignment will not relieve Acquiror or MergerSub of its obligations hereunder.
Any purported assignment in violation hereof shall be null and void.
<PAGE>
11.5. GOVERNING LAW. Except to the extent that the laws of the State of
Wisconsin or any other jurisdiction are mandatorily applicable to the matters
arising under or in connection with this Agreement, this Agreement shall be
construed in accordance with and governed by the internal laws of the State of
New York.
11.6. COUNTERPARTS; EFFECTIVENESS; THIRD PARTY BENEFICIARIES. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Except as set forth in Sections 3.5 and 7.3, no provision of this Agreement is
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
11.7. JURISDICTION. Except as otherwise expressly provided in this
Agreement, the parties hereto agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in the United States District Court for the Southern District of New
York or any New York State court sitting in New York City, and each of the
parties hereby consents to the exclusive jurisdiction of those courts (and of
the appropriate appellate courts therefrom) in any suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any suit,
action or proceeding in any of those courts or that any suit, action or
proceeding which is brought in any of those courts has been brought in an
inconvenient forum. Process in any suit, action or proceeding may be served on
any party anywhere in the world, whether within or without the jurisdiction of
any of the named courts. Without limiting the foregoing, each party agrees that
service of process on it by notice as provided in Section 11.1 shall be deemed
effective service of process.
11.8. WAIVER OF JURY TRIAL. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
11.9. ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
11.10. ENTIRE AGREEMENT. This Agreement (together with the exhibits and
schedules hereto) constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
STORA ENSO OYJ CONSOLIDATED PAPERS, INC.
By: /s/ Jukka Harmala By: /s/ Gorton M. Evans
--------------------- ----------------------
Name: Jukka Harmala Name: Gorton M. Evans
Title: Chief Executive Officer Title: President and Chief
Executive Officer
STORA ENSO ACQUISITION, INC.
By:/s/ Magnus Diesen
--------------------
Name: Magnus Diesen
Title: President
